Greetings, fellow investors and market watchers!
Today, we’re diving deep into the latest financial performance of Reservoir Link Energy Bhd (RLEB) for its fourth quarter and full financial year ended 30 June 2025. This report presents a fascinating picture of a company navigating a dynamic energy landscape, showcasing both remarkable full-year growth and a challenging quarter impacted by significant one-off events. Let’s unpack the numbers and strategic moves that define RLEB’s journey.
While the fourth quarter saw a dip in revenue and a notable loss due to a one-off impairment, Reservoir Link Energy Bhd managed to deliver an impressive turnaround for the full financial year, swinging from a loss to a substantial profit. This demonstrates the resilience of its diversified strategy and the impact of earlier strategic gains.
Q4 FY2025 Performance: A Deeper Dive
For the three months ended 30 June 2025, RLEB experienced a decline in performance compared to the previous year’s corresponding quarter. Group revenue decreased by a significant 41%, and the company recorded a considerable loss before taxation.
Current Quarter (30.06.2025)
Revenue: RM25.6 million
Loss Before Taxation: RM(50.9) million
Basic Loss Per Share: (15.61) sen
Previous Corresponding Quarter (30.06.2024)
Revenue: RM43.0 million
Profit Before Taxation: RM0.2 million
Basic Loss Per Share: (0.16) sen
The RM17.4 million reduction in revenue was primarily due to a substantial RM15.3 million decrease from the Renewable Energy EPCC segment. This was a direct consequence of the dilution of RLEB’s shareholding in Founder Group Limited (FGL) from 51% to 45% following FGL’s NASDAQ listing in October 2024, leading to FGL being accounted for as an associate rather than a consolidated subsidiary. Additionally, the Oil & Gas segment saw a RM2.5 million dip due to the expiry of certain contracts.
The significant loss before taxation was largely attributable to a one-off impairment loss of RM48.4 million on an investment in an associate, coupled with a write-off of other receivables amounting to RM2.2 million. These non-recurring items had a substantial impact on the quarterly results.
Full Year FY2025: A Turnaround Story
Despite the challenging fourth quarter, RLEB’s full-year performance for the 12 months ended 30 June 2025 tells a more positive story of strategic resilience and a successful turnaround from the previous year’s loss.
Current Year-To-Date (30.06.2025)
Revenue: RM125.4 million
Profit Before Taxation: RM33.7 million
Basic Earnings Per Share: 8.75 sen
Net Asset Per Share: RM0.38
Previous Year-To-Date (30.06.2024)
Revenue: RM185.6 million
Profit Before Taxation: RM4.1 million
Basic Loss Per Share: (0.27) sen
Net Asset Per Share: RM0.30
The group’s full-year revenue decreased by 32%, or RM60.2 million. Similar to the quarterly performance, this was primarily due to the RM85.3 million reduction from the Renewable Energy EPCC segment following the change in FGL’s accounting treatment. However, the true highlight is the profit before taxation, which surged by over 100% to RM33.7 million from RM4.1 million previously. This impressive increase was mainly driven by a fair value gain of RM36.3 million on an investment in an associate that occurred earlier in the financial year, effectively offsetting the fourth-quarter’s impairment and other write-offs.
Shareholders also saw an increase in Net Asset per share, rising from RM0.30 to RM0.38, reflecting an improved financial standing. Total equity significantly increased from RM93.7 million to RM127.3 million, while total liabilities decreased from RM138.0 million to RM93.5 million, indicating a healthier balance sheet.
Segmental Insights: Where the Business Stands
Let’s break down the revenue contribution from RLEB’s key operating segments:
| Operating Segment | Q4 FY2025 Revenue (RM’000) | Q4 FY2024 Revenue (RM’000) | FY2025 Revenue (RM’000) | FY2024 Revenue (RM’000) |
|---|---|---|---|---|
| Oil and gas related activities | 25,378 | 26,373 | 98,550 | 81,131 |
| Renewable energy related and other activities | 452 | 15,993 | 27,380 | 110,646 |
| Wastewater Treatment related activities | 2,870 | 2,295 | 12,546 | 2,295 |
The Oil and Gas segment, a core business for RLEB, showed a slight dip in the current quarter but a robust 21% increase for the full year, reflecting a strong recovery and new work orders. The Renewable Energy segment, heavily impacted by the FGL dilution, saw significant revenue declines in both the quarter and full year. Conversely, the Wastewater Treatment segment demonstrated strong growth, particularly for the full year, highlighting its increasing contribution to the group.
Navigating the Energy Transition: Opportunities Ahead
Reservoir Link is strategically positioned to capitalize on opportunities across both traditional and renewable energy sectors. The company’s prospects are underpinned by several key trends and strategic initiatives:
- Oil & Gas Sector Resilience: Supported by crude oil price projections of US$70-US$80 per barrel (Petronas Activity Outlook 2025-2027), Malaysia’s O&G upstream services segment anticipates a stable outlook. RLEB is well-placed to benefit from an expected slight rise in well drilling and, more importantly, the upcoming wave of Plug & Abandonment (“P&A”) and decommissioning activities. With its established capabilities and strategic partnerships, RLEB aims to secure high-value contracts in this growing area.
- Strategic Acquisition: In May 2025, RLEB acquired a 30% equity interest in Propel Maxflo Sdn Bhd, a move designed to strengthen its core capabilities in the O&G sector and expand market presence through synergies in operations and technology.
- Renewable Energy Expansion: Malaysia’s ambitious Renewable Energy Roadmap (MyRER) and National Energy Transition Roadmap (NETR), targeting 70% renewable energy by 2050, provide a strong tailwind. RLEB’s selection as a solar power producer under the Corporate Green Power Programme (CGPP) and potential participation in the Large Scale Solar (LSS PETRA) competitive bidding process, which offers 2,000 MW of capacity, are key avenues for growth in sustainable energy.
- FGL’s NASDAQ Listing: While RLEB’s shareholding in Founder Group Limited (FGL) was diluted, FGL’s successful NASDAQ listing is a strategic move that enhances its access to capital and broadens its investor base. This increased financial flexibility is expected to support FGL’s expansion in the solar renewable energy sector, from which RLEB, as an associate, is well-positioned to benefit.
Addressing Challenges and Future Strategies
The fourth quarter’s impairment loss on an investment in an associate highlights the inherent risks in dynamic growth strategies, particularly in rapidly evolving sectors. However, the company’s full-year performance demonstrates its capacity to absorb such impacts while maintaining overall profitability.
RLEB remains committed to pursuing new tenders in both the oil & gas and renewable energy sectors, leveraging its established expertise while expanding into clean energy. This dual-pronged strategy aims to reinforce its resilience in an evolving industry and achieve sustained growth, as evidenced by its commitment to cautiously implement business strategies aligned with market trends.
Summary and Investment Recommendations
Reservoir Link Energy Bhd’s latest financial report showcases a company at a pivotal juncture. While the fourth quarter presented a significant earnings setback due to a one-off impairment and revenue adjustments from a strategic shift in an associate, the full financial year ended June 2025 paints a much more encouraging picture. The company successfully transitioned from a full-year loss to a substantial profit, largely driven by a fair value gain recognized earlier in the year. This underscores the potential value embedded in its strategic investments and its ability to deliver positive cumulative results despite short-term challenges. RLEB’s commitment to both the robust traditional oil & gas sector (especially P&A and decommissioning) and the rapidly expanding renewable energy market (MyRER, NETR, CGPP, LSS PETRA) positions it for future growth. The NASDAQ listing of FGL, though resulting in shareholding dilution, offers long-term benefits through enhanced capital access for the associate.
However, investors should also be mindful of the following key points:
- The significant impact of associate performance, as seen with both the fair value gain and the impairment loss, indicates that RLEB’s financial results can be influenced by the performance and accounting treatment of these entities.
- Revenue volatility in the Renewable Energy segment is likely to persist due to the ongoing strategic recalibration and accounting changes related to FGL.
- Execution risks associated with new projects and tenders in both O&G and RE sectors will be crucial for maintaining growth momentum.
- While total liabilities have decreased, bank borrowings remain a notable part of the financial structure.
RLEB’s journey reflects the complexities of balancing traditional strengths with ambitious new ventures. The company’s strategic moves, from acquisitions to participation in key national energy programs, indicate a forward-looking approach. While the one-off items in Q4 were impactful, the full-year results demonstrate a resilient underlying strategy.
Do you believe Reservoir Link Energy Bhd can successfully navigate these challenges and maintain its positive full-year growth momentum in the coming years? Share your thoughts in the comment section below!
