Tiong Nam Logistics Navigates Growth Path with Robust Revenue, Strategic Expansion in Latest Quarter
Hello fellow investors and enthusiasts!
Today, we’re diving into the latest interim financial report from Tiong Nam Logistics Holdings Berhad for the quarter ended 30 June 2025. This Malaysian integrated logistics and warehousing solutions provider has presented a report that paints a picture of strong top-line growth, strategic expansion, but also highlights areas where costs are exerting pressure on the bottom line. Let’s unpack the numbers and see what’s driving their performance and what lies ahead.
Key Takeaway: Tiong Nam recorded an impressive 18.08% increase in revenue and a 24.30% jump in Profit Before Tax compared to the same quarter last year. While net profit also grew, the group faces rising operational costs and finance expenses. Significant strategic initiatives are underway to secure future growth.
Unpacking the Core Financials: A Quarter of Growth
Tiong Nam kicked off its financial year with a solid performance in the first quarter, reporting a healthy increase in both revenue and profit before tax. However, a deeper look reveals that various expenses have eaten into the net profit growth.
Overall Performance (QoQ Comparison)
Current Quarter (30 June 2025)
Revenue: RM236.23 million
Profit Before Tax: RM9.26 million
Net Profit for the Period: RM4.17 million
Basic Earnings Per Share: 0.76 sen
Same Quarter Last Year (30 June 2024)
Revenue: RM200.06 million
Profit Before Tax: RM7.45 million
Net Profit for the Period: RM3.83 million
Basic Earnings Per Share: 0.68 sen
The company’s revenue surged by 18.08% to RM236.23 million, largely driven by its core Logistics and Warehousing Services. Profit Before Tax (PBT) showed an even stronger jump of 24.30%, reaching RM9.26 million. This indicates improved operational efficiency at the gross profit level. However, Net Profit for the period attributable to equity holders saw a more modest increase of 13.34% to RM3.98 million, resulting in Basic Earnings Per Share rising by 11.20% to 0.76 sen. This disparity between PBT and Net Profit growth is mainly due to significantly higher depreciation and amortisation costs (up 34.56%) and increased finance costs (up 18.18%), alongside a higher effective tax rate.
Segmental Highlights: Core Business Driving Growth
Let’s break down the performance of Tiong Nam’s key business units:
- Logistics & Warehousing Services: This remains the bedrock of Tiong Nam’s operations, with revenue growing impressively by 15.9% to RM225.77 million (compared to RM194.94 million in the same quarter last year). This segment also delivered a healthy profit before tax of RM12.10 million, up from RM8.77 million, underscoring its strong contribution to the group’s overall performance.
- Property Development: This segment saw a remarkable revenue increase of 120.9%, soaring to RM9.54 million from RM4.26 million. While this is a significant top-line improvement, the segment still recorded a loss before tax of RM2.23 million, indicating it’s still in a development phase with associated costs.
- Investments: The investment segment’s profit before tax decreased significantly to RM0.38 million from RM1.52 million in the previous corresponding quarter. This was influenced by the share of losses from associates and a newly recognized share of loss in a joint venture.
- Dormitory: This segment continues to be relatively small and is operating at a loss, though the loss was slightly reduced compared to the same period last year.
Financial Health and Cash Flow
As of 30 June 2025, Tiong Nam’s total assets grew to RM3.46 billion from RM3.36 billion as at 31 March 2025, primarily driven by increases in property, plant and equipment and right-of-use assets. Total equity attributable to shareholders also saw a slight increase, bringing Net Assets per share to RM2.04 (from RM2.03). The group’s total borrowings increased to RM1.81 billion from RM1.76 billion. While net cash generated from operating activities was positive at RM65.59 million, the overall cash and cash equivalents position at the end of the period remained negative, standing at (RM38.31 million), indicating a reliance on bank overdrafts. The company also has significant capital commitments of RM218.0 million for property, plant and equipment, signalling ongoing investment in its infrastructure.
Risks and Future Prospects: Building for Tomorrow
Tiong Nam is clearly not resting on its laurels. The report highlights strategic moves designed to strengthen its market position and drive future growth.
Bright Prospects Ahead:
- Logistics Dominance: The integrated logistics and warehousing services segment is expected to continue its positive performance in FY2026. This is underpinned by Malaysia’s resilient economic growth and increasing business from both existing and new domestic and multinational clients.
- Strategic Expansion: Tiong Nam is actively expanding its warehousing capacity, with new facilities set to become operational in stages throughout FY2026 and beyond. This expansion is crucial for meeting growing market demand and is expected to contribute positively to financial performance.
- High-Tech Logistics Park: A significant long-term growth opportunity lies in the proposed 300-acre high-tech logistics park in Johor, a joint venture with JLand Group. This initiative is well-positioned to capitalize on the Johor-Singapore Special Economic Zone (JS-SEZ), which is anticipated to attract substantial investments.
- Property Development Resilience: The property development segment anticipates improved performance from its ongoing residential project in Johor, which will help mitigate the persistent weakness in the smaller dormitory segment.
Navigating Challenges:
- Cost Pressures: The notable increases in depreciation, amortisation, and finance costs are areas to monitor closely. While some of these are tied to expansion (depreciation from new assets, finance costs from borrowings), sustained high growth in these expenses could impact profitability. The effective tax rate for the quarter was also higher than the statutory rate due to non-deductible expenses.
- Cash Flow Management: The continued negative cash and cash equivalents position, mainly due to bank overdrafts, indicates a need for careful cash flow management, especially with ongoing capital expenditure and increased borrowings.
- Material Litigation: The group is still involved in a long-standing material litigation case (Terminal Perintis Sdn Bhd vs TNH Maju Sdn Bhd) with significant claims involved. While the arbitration is currently on hold, this remains a contingent liability that could impact the company if it proceeds.
Summary and Investment Recommendations
Tiong Nam Logistics Holdings Berhad has delivered a mixed, but largely positive, first-quarter report. The company’s core logistics and warehousing segment continues to be a strong performer, driving robust revenue and profit before tax growth. Strategic expansions, particularly the new logistics park in Johor, hold significant promise for long-term value creation, aligning well with broader economic trends and regional development initiatives.
However, investors should also be mindful of the increasing operational expenses, particularly depreciation and finance costs, which are weighing on net profit growth. The group’s net negative cash position and the lingering material litigation also warrant attention. The management’s focus on operational efficiency and cost management will be critical in converting top-line growth into stronger bottom-line results.
Key points to consider:
- Strong revenue and PBT growth in core logistics segment, driven by resilient economic activity.
- Significant strategic investments in warehousing capacity and the Johor high-tech logistics park for future growth.
- Rising depreciation, finance costs, and a higher effective tax rate are compressing net profit margins.
- Increased borrowings and a net negative cash position suggest tight liquidity management.
- Ongoing material litigation presents a long-term contingent liability.
As a blogger, my aim is to provide an objective analysis of the company’s performance. Based on the report, Tiong Nam is in a growth phase, backed by strategic initiatives. The success of these initiatives and the management’s ability to control costs will be crucial for sustained profitability.
What are your thoughts on Tiong Nam’s latest quarter? Do you believe their strategic expansion plans, especially the Johor logistics park, will provide the significant boost needed to overcome the rising cost pressures? Share your views and insights in the comments section below!
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