THONG GUAN INDUSTRIES BERHAD: Navigating Global Headwinds in Q2 2025
Greetings, fellow investors! Today, we delve into the latest financial performance of THONG GUAN INDUSTRIES BERHAD, a prominent player in the manufacturing sector. The company has just released its unaudited quarterly report for the second quarter ended 30 June 2025, offering a crucial glimpse into its operational health and strategic direction amidst a challenging global economic landscape.
This quarter’s report presents a mixed bag of results, showcasing both resilience and areas needing careful navigation. While the group saw an encouraging surge in its food, beverages, and other consumable products division, its core plastic packaging segment faced headwinds. Notably, despite a dip in overall profit compared to the same period last year, the company continues to focus on long-term sustainability and operational efficiency. Let’s break down the key figures and understand what they mean for TGI moving forward.
Core Data Highlights: A Closer Look at Performance
THONG GUAN INDUSTRIES BERHAD’s second quarter of 2025 and the cumulative six-month period reveal a dynamic performance across its divisions. Here’s an in-depth look at the numbers:
Overall Group Performance (Individual Quarter)
Q2 2025 (Reporting Period)
Revenue: RM296.96 million
Profit Before Tax (PBT): RM20.15 million
Profit for the Period: RM16.17 million
Basic Earnings per Share: 4.14 sen
Q2 2024 (Comparison Period)
Revenue: RM303.24 million
Profit Before Tax (PBT): RM26.04 million
Profit for the Period: RM21.03 million
Basic Earnings per Share: 5.23 sen
For the individual quarter ended 30 June 2025, the Group reported a total revenue of RM296.96 million, a slight decrease of 2.1% compared to RM303.24 million in the corresponding quarter of the previous financial year. Profit Before Tax (PBT) for the quarter stood at RM20.15 million, marking a 22.6% decline from RM26.04 million in Q2 2024. Consequently, the Basic Earnings per Share (EPS) saw a decrease to 4.14 sen from 5.23 sen.
Overall Group Performance (Cumulative Period)
YTD 30 June 2025 (Reporting Period)
Revenue: RM615.97 million
Profit Before Tax (PBT): RM42.44 million
Profit for the Period: RM33.69 million
Basic Earnings per Share: 8.59 sen
YTD 30 June 2024 (Comparison Period)
Revenue: RM647.89 million
Profit Before Tax (PBT): RM57.27 million
Profit for the Period: RM45.65 million
Basic Earnings per Share: 11.21 sen
On a cumulative basis for the six months ended 30 June 2025, the Group’s revenue was RM615.97 million, a 4.9% reduction from RM647.89 million in the prior year’s corresponding period. PBT for the period decreased by 25.9% to RM42.44 million from RM57.27 million. Basic EPS for the cumulative period also declined to 8.59 sen from 11.21 sen.
Segmental Performance: Plastic Packaging vs. Food & Beverages
Plastic Packaging Products Division
This division recorded a revenue of RM257.67 million for Q2 2025, a 3.9% decrease from RM268.19 million in Q2 2024. The PBT also saw a significant drop of 48.5% to RM12.14 million from RM23.56 million. The report attributes this decline primarily to lower average selling prices (ASP) across its product range, largely influenced by the depreciation of the USD.
For the cumulative six-month period, revenue for plastic packaging products decreased by 7.0% to RM535.47 million, and PBT fell by 47.8% to RM26.66 million, reinforcing the impact of reduced ASPs.
Food, Beverages and Other Consumable Products Division
In contrast, this division performed strongly, with Q2 2025 revenue increasing by 12.1% to RM39.29 million from RM35.05 million in Q2 2024. The PBT for this segment surged by an impressive 223.1% to RM8.01 million from RM2.48 million. This growth was driven by higher overall sales of coffee, tea, and instant beverage products, coupled with significant increases in coffee bean and tea dust prices, leading to stockholding gains and enhanced profitability.
Cumulatively, this division achieved an 11.4% revenue growth to RM80.50 million and a remarkable 155.9% increase in PBT to RM15.78 million, consistently benefiting from higher sales volumes and rising ASPs.
Comparison with Immediate Preceding Quarter (Q1 2025)
Comparing Q2 2025 to the immediate preceding quarter (Q1 2025), the Group’s revenue decreased by 6.9% from RM319.01 million to RM296.96 million. PBT also saw a 9.7% decline from RM22.30 million to RM20.15 million. This dip was primarily due to lower sales quantities across various plastic product lines, alongside the continued impact of a depreciating USD on ASPs.
Financial Position: Balance Sheet & Cash Flow
Let’s also briefly touch upon the Group’s financial health as of 30 June 2025:
| Financial Indicator | As at 30 June 2025 (RM’000) | As at 31 Dec 2024 (RM’000) | Change (RM’000) | Change (%) |
|---|---|---|---|---|
| Total Assets | 1,405,458 | 1,483,006 | (77,548) | -5.2% |
| Total Equity | 997,504 | 986,363 | 11,141 | +1.1% |
| Net Assets per Share (RM) | 2.41 | 2.38 | 0.03 | +1.3% |
| Inventories | 304,827 | 381,101 | (76,274) | -20.0% |
| Short Term Borrowings | 157,480 | 186,657 | (29,177) | -15.6% |
The balance sheet shows a slight decrease in total assets, mainly due to a reduction in inventories, which could indicate efficient inventory management. Total equity saw a modest increase, contributing to a slightly higher Net Assets per Share. The reduction in short-term borrowings is also a positive sign for financial stability.
From a cash flow perspective, net cash generated from operating activities for the six months ended 30 June 2025 significantly decreased to RM33.50 million from RM91.83 million in the prior corresponding period. This was mainly due to changes in working capital, particularly trade and other payables. However, the company utilized less cash in investing activities compared to the previous year, while financing activities saw a higher net cash outflow, partly due to less proceeds from ESOS compared to the prior year.
Risk and Prospect Analysis: Navigating a Complex Landscape
THONG GUAN INDUSTRIES BERHAD operates in an environment fraught with global uncertainties. The company acknowledges that 2025 is projected to bring moderated global economic growth, driven by escalating reciprocal tariffs, weakening international trade, geopolitical tensions, and persistent inflationary pressures. These factors, alongside rising business costs and volatile capital markets, are creating a more complex operating environment.
Specific challenges highlighted in the report include the expansion of the Sales & Services Tax (SST) taxable area, amendments to electricity charges, an increase in minimum wages, and the imposition of a 19% US reciprocal tariff for Malaysia in the second half of the year. These elements are adding to cost pressures and impacting overall operational expenses.
In response, TGI is not standing still. The company remains committed to robust cost mitigation strategies, including waste reduction, process optimization, and enhancing operational efficiency across its segments. Simultaneously, it plans to expand its market presence in existing regions and actively explore new avenues for sustainable growth.
The management expresses confidence in its ability to adapt proactively, leverage emerging opportunities, and strengthen operational agility to sustain performance and maintain a competitive edge. Barring unforeseen circumstances, the Group anticipates continued growth in the current financial year.
Summary and Investment Recommendations
THONG GUAN INDUSTRIES BERHAD’s Q2 2025 report paints a picture of a company navigating challenging economic currents with a clear strategic focus. While the plastic packaging division faced a notable slowdown due to lower average selling prices and a depreciating USD, the food, beverages, and other consumable products segment delivered impressive growth, driven by increased sales and favorable commodity price movements. The overall profitability of the Group has seen a decline compared to the same period last year, reflecting the pressures from global economic moderation and rising operational costs.
However, TGI’s proactive measures in cost control, operational efficiency, and market expansion demonstrate a resilient approach. The company’s efforts to mitigate risks and capitalize on growth opportunities, especially in its thriving food and beverage segment, are crucial for its future trajectory.
Key points to monitor include:
- The Group’s ability to offset lower ASPs in its plastic packaging division through cost efficiency and market diversification.
- The sustained growth and profitability of the food, beverages, and other consumable products segment.
- The effectiveness of TGI’s strategies in managing rising business costs and adapting to changes in taxation and tariffs.
- Any further developments regarding the acquisition of TG Europe A/S and the new subsidiary in Indonesia, PT TGP Plaspack Lestari.
It is important to note that the Board of Directors did not recommend any dividend for the financial period under review.
What are your thoughts on THONG GUAN INDUSTRIES BERHAD’s latest performance? Do you believe the company’s strategies are robust enough to maintain growth momentum amidst the global economic challenges ahead? Share your insights and perspectives in the comments section below!
Disclaimer: This blog post is intended for informational purposes only and does not constitute financial advice or investment recommendations. Readers should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.
