Hello fellow investors and market watchers! We’re diving deep into the latest financial disclosures from Pacific & Orient Berhad (P&O), providing you with a clear and concise breakdown of their performance for the nine months ended 30 June 2025. This report offers a comprehensive look at how the company is navigating a dynamic economic landscape, showcasing both the challenges faced and strategic efforts undertaken. Let’s unwrap the numbers and understand what they mean for P&O’s journey ahead.
Key Takeaways at a Glance
Pacific & Orient Berhad has just released its unaudited financial results for the nine months ended 30 June 2025, revealing a mixed but strategically focused period. While the Group recorded an increase in pre-tax losses for both the current quarter and year-to-date compared to their respective preceding periods, there’s a notable improvement in the loss attributable to equity holders of the Company for the year-to-date. This suggests underlying strengths and targeted efforts are beginning to mitigate some of the broader challenges.
Decoding P&O’s Financial Performance
Group Financial Overview: Quarter-on-Quarter Snapshot
For the quarter ended 30 June 2025, P&O faced increased headwinds, primarily driven by unrealised foreign exchange losses. Here’s a quick comparison:
Current Quarter (Q3 FY2025)
- Revenue: RM72,199,000
- Operating Loss: RM(23,186,000)
- Loss Before Tax: RM(23,776,000)
- Loss After Tax: RM(20,473,000)
- Loss Attributable to Equity Holders: RM(14,881,000)
Preceding Year Corresponding Quarter (Q3 FY2204)
- Revenue: RM74,610,000
- Operating Loss: RM(16,695,000)
- Loss Before Tax: RM(17,188,000)
- Loss After Tax: RM(16,216,000)
- Loss Attributable to Equity Holders: RM(15,050,000)
The Group’s revenue saw a slight decrease of 3%, from RM74.61 million to RM72.20 million. More significantly, the loss before tax widened by 38% to RM23.78 million from RM17.19 million in the same quarter last year. This was primarily attributed to an increase in unrealised foreign exchange loss amounting to RM6.59 million, stemming from loans to foreign entities. Despite the increased overall loss, the loss attributable to equity holders actually improved slightly, decreasing by 1% to RM14.88 million.
Year-to-Date Performance: A Broader View
Looking at the nine-month period, the picture is more nuanced. While pre-tax loss increased, the loss attributable to equity holders saw a significant improvement.
Current Year-to-Date (9M FY2025)
- Revenue: RM224,605,000
- Operating Loss: RM(20,154,000)
- Loss Before Tax: RM(21,960,000)
- Loss After Tax: RM(18,942,000)
- Loss Attributable to Equity Holders: RM(9,962,000)
Preceding Year Corresponding Period (9M FY2024)
- Revenue: RM225,286,000
- Operating Loss: RM(16,309,000)
- Loss Before Tax: RM(19,769,000)
- Loss After Tax: RM(19,115,000)
- Loss Attributable to Equity Holders: RM(18,206,000)
Year-to-date revenue remained relatively stable at RM224.61 million, a marginal 0% decrease from RM225.29 million in the preceding year’s corresponding period. However, the pre-tax loss increased by 11% to RM21.96 million. This was largely influenced by a loss on disposal of investment of RM1.56 million in the current period, contrasting with a gain of RM5.06 million in the prior year. On a more positive note, the loss attributable to equity holders of the Company saw a substantial improvement of 45%, reducing to RM9.96 million from RM18.21 million.
Segmental Deep Dive
P&O operates across several key segments, each contributing differently to the overall performance:
- Insurance Segment: Revenue for the quarter decreased by RM1.67 million to RM69.11 million due to lower earned premiums. The segment recorded a higher pre-tax loss of RM15.15 million (compared to RM3.69 million in the prior year’s corresponding quarter), mainly due to increased insurance claims expenses and lower claims recoveries from reinsurers. For the nine-month period, similar trends were observed, with pre-tax loss widening to RM22.63 million.
- Information Technology (IT) Segment: Quarterly revenue decreased by RM0.47 million to RM9.32 million, resulting in a pre-tax loss of RM1.59 million, exacerbated by an increase in unrealised foreign exchange loss. However, for the nine-month period, revenue increased by RM0.55 million to RM28.72 million, with the segment turning profitable at RM1.54 million pre-tax profit, driven by higher gross profit margins and unrealised foreign exchange gains.
- Investment in Start-ups Segment: This segment reported a significantly lower pre-tax loss of RM2.06 million for the current quarter (compared to RM28.00 million in the prior year’s corresponding quarter) primarily due to the absence of impairment loss on investment in an associated company. This positive trend continued for the nine-month period, with pre-tax loss reduced to RM5.86 million.
- Property Development Segment: The segment recorded a pre-tax loss of RM1.75 million for the current quarter, a decline from a pre-tax profit of RM0.53 million in the prior year’s corresponding quarter. This was due to higher operating expenditure and the absence of insurance claims. For the nine-month period, the pre-tax loss deepened to RM6.94 million, mainly due to increased finance costs and the absence of insurance claims.
Financial Health Check: Balance Sheet and Cash Flow
As at 30 June 2025, P&O’s total assets stood at RM1,050,591,000, a decrease from RM1,087,092,000 at 30 September 2024, mainly due to the disposal of investment securities. Total liabilities also saw a decrease to RM676,975,000 from RM693,653,000, primarily attributed to a reduction in insurance contract liabilities. Equity attributable to equity holders was RM270,611,000, down from RM281,469,000, reflecting the period’s loss after tax. Net assets per share decreased from 100 sen to 96 sen.
Cash and cash equivalents as at 30 June 2025 amounted to RM36,432,000. The Group utilised RM25.61 million in operating activities, mainly for settling insurance contract liabilities. However, a significant RM40.07 million was generated from investing activities, largely from proceeds from the disposal of quoted investments. Financing activities saw a net cash outflow of RM3.98 million, mainly due to the repayment of lease liabilities.
Risks and Future Prospects
P&O acknowledges the challenging global environment marked by international trade tensions and US trade tariffs, which could dampen the Malaysian economy and impact domestic demand for insurance products. Despite these headwinds, the Group remains committed to optimising operations, managing costs, and strengthening its core businesses, while keeping an eye on long-term growth.
- Insurance Industry: The Malaysian insurance industry is expected to evolve with economic recovery, regulatory changes, and digital advancements. P&O’s strategy includes improving customer service, offering relevant products, and enhancing digital platforms for convenience, alongside monitoring industry trends.
- IT Division: Operating in a competitive market, the IT division focuses on enhancing service delivery, maintaining client relationships, and developing digital capabilities.
- US Property Development: The US property project faces a subdued market due to high interest rates and immigration policies, coupled with construction material price uncertainty. Financing preparations for the construction loan are ongoing, with efforts to drive sales and finalise arrangements to resume the project at full pace.
Overall, P&O is committed to navigating these challenges and closely monitoring its performance throughout the financial year, indicating a proactive approach to a complex operating landscape.
Summary and Investment Recommendations
Pacific & Orient Berhad’s latest quarterly report paints a picture of resilience amidst a challenging global and domestic economic environment. While the Group recorded an increase in pre-tax losses for both the current quarter and year-to-date, the significant reduction in loss attributable to equity holders for the nine-month period suggests that strategic cost management and operational adjustments are having a positive impact where it matters most for shareholders.
The varied performance across segments highlights the Group’s diverse portfolio. The IT segment’s shift to profitability is a bright spot, indicating successful adaptation and market penetration. Conversely, the Insurance and Property Development segments face continued headwinds, necessitating careful monitoring of their strategies and market conditions.
The Group’s financial position shows a prudent approach to managing assets and liabilities, with a noticeable decrease in both. Cash flow remains an area of focus, with operating activities consuming cash, but investing activities generating substantial funds through asset disposals. This suggests active portfolio management in response to market conditions.
Looking ahead, the company is acutely aware of the external pressures, from global trade tensions to specific market conditions impacting its US property development project. Their stated commitment to enhancing digital platforms, improving customer service, and securing financing for key projects outlines a clear path forward. Investors should keep a close watch on how these strategies translate into improved financial metrics in the coming quarters.
Key points to consider moving forward:
- The resolution and impact of the ongoing material litigations, particularly those related to the US property development project, which are currently accrued in the financial statements.
- The success of financing arrangements and sales efforts for the US property development project, as this segment continues to be a drag on overall performance.
- The ability of the Insurance segment to navigate increasing claims expenses and lower claims recoveries, and how digital transformation initiatives will mitigate these challenges.
- The IT segment’s ability to maintain its growth momentum and profitability in a competitive market.
- The broader impact of the global economic climate and foreign exchange fluctuations on the Group’s diverse operations.
This report offers a transparent view into P&O’s current state and strategic direction. As a long-term observer of the Malaysian market, I find the company’s proactive approach to navigating external challenges noteworthy. The focus on strengthening core business segments and enhancing digital capabilities indicates a clear vision for adaptability and growth.
Do you think P&O can maintain this growth momentum in specific segments and effectively mitigate the challenges in others over the next few years? What are your thoughts on P&O’s strategy in navigating these diverse market conditions?
Share your insights and perspectives in the comments section below – let’s discuss!
