Hello, fellow investors and market enthusiasts! Today, we’re diving deep into the latest financial pulse of Northeast Group Berhad (NGB), a key player in Malaysia’s precision engineering landscape. The company has just released its unaudited interim financial report for the third quarter ended 30 June 2025 (Q3 FY2025), and it paints a picture of robust operational growth amidst strategic expansion.
While the global economic environment remains fluid, NGB’s latest results highlight impressive gains in revenue and profit for the quarter, demonstrating resilience and forward momentum. For the nine-month cumulative period, the company has shown positive growth, especially after accounting for one-off listing expenses. Let’s unpack the numbers and strategies that are shaping NGB’s journey.
Core Data Highlights: A Quarter of Strong Growth
Northeast Group Berhad delivered a strong performance for the third quarter of its financial year, showing significant year-on-year growth. For the three months ended 30 June 2025 (Q3 2025), the Group’s revenue surged, reflecting robust demand in its core markets.
Q3 2025 Performance
Revenue: RM31.68 million
Profit Before Tax (PBT): RM7.91 million
Profit After Tax (PAT): RM7.10 million
Basic/Diluted Earnings Per Share (EPS): 0.96 sen
Q3 2024 Performance
Revenue: RM21.57 million
Profit Before Tax (PBT): RM4.31 million
Profit After Tax (PAT): RM3.20 million
Basic/Diluted EPS: 0.43 sen
This translates to an impressive 47% jump in revenue, an 84% surge in Profit Before Tax, and a remarkable 122% increase in Profit After Tax compared to the same period last year. Earnings per share more than doubled, climbing from 0.43 sen to 0.96 sen.
Cumulative Performance: Growth Despite One-Offs
Looking at the cumulative nine-month performance ending 30 June 2025, the Group continued its growth trajectory, albeit with a nuanced picture for pre-tax profit due to one-off expenses.
9 Months Ended 30.6.2025
Revenue: RM83.31 million
Reported PBT: RM16.90 million
Adjusted PBT (excluding listing expenses): RM20.59 million
PAT: RM13.44 million
Basic/Diluted EPS: 1.82 sen
9 Months Ended 30.6.2024
Revenue: RM68.61 million
PBT: RM17.19 million
PAT: RM12.98 million
Basic/Diluted EPS: 1.75 sen
For the nine-month period, revenue grew by 21% to RM83.31 million. While the reported Profit Before Tax (PBT) showed a slight decrease of 2% to RM16.90 million, it’s crucial to note that this figure includes one-off listing expenses of approximately RM3.69 million related to the Company’s recent listing exercise. Adjusting for these non-recurring costs, the adjusted PBT would have been a robust RM20.59 million, demonstrating stronger underlying profitability.
Profit After Tax for the cumulative period increased by 4% to RM13.44 million, with basic earnings per share rising from 1.75 sen to 1.82 sen.
Quarter-on-Quarter Momentum
The growth momentum isn’t just about year-on-year comparisons; Northeast Group Berhad also showed impressive quarter-on-quarter improvement, signaling sustained operational strength from the immediate preceding quarter (Q2 2025).
| Metric | Q3 2025 (RM’000) | Q2 2025 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 31,677 | 27,453 | 15% |
| Profit Before Tax (PBT) | 7,909 | 7,177 | 10% |
| Profit After Tax (PAT) | 7,100 | 6,059 | 17% |
The Group’s revenue for Q3 2025 saw a healthy 15% increase compared to Q2 2025, primarily fueled by stronger sales in the semiconductor and photonic industries. This uplift in revenue directly contributed to a 10% rise in PBT and a 17% jump in PAT quarter-on-quarter, underscoring effective operational management and market responsiveness. Geographically, revenue was primarily generated from customers in Malaysia, Europe, and North America.
Strengthening the Financial Foundation: Balance Sheet & Cash Flow
Beyond the profit and loss, a quick look at the balance sheet and cash flow statement reveals a significantly strengthened financial position, partly attributable to its recent Initial Public Offering (IPO).
NGB’s balance sheet as at 30 June 2025 demonstrates a marked improvement in financial health. Total assets have expanded to RM288.76 million from RM206.99 million as at 30 September 2024. This growth is mirrored in the substantial increase in total equity, which soared to RM252.01 million from RM156.49 million, largely due to the proceeds from the IPO.
A notable highlight is the significant increase in cash and bank balances, which more than doubled to RM156.04 million from RM87.06 million, providing a strong liquidity position. Concurrently, total liabilities saw a healthy reduction to RM36.75 million from RM50.51 million, primarily driven by the repayment of bank borrowings using IPO proceeds. This led to a higher net assets per share, increasing from RM0.27 to RM0.34.
From a cash flow perspective, operating activities generated a robust RM18.16 million over the nine-month period, a significant improvement from RM7.84 million in the prior year, indicating strong core business performance. While investing activities show higher cash outflow (RM8.26 million) due to increased capital expenditure (e.g., property, plant, and equipment purchases), this aligns with the Group’s growth strategies.
The financing activities reflect the impact of the IPO, with RM58.16 million generated, primarily from the issuance of new shares, enabling substantial debt reduction and bolstering the cash reserves.
Navigating the Future: Prospects and Strategic Focus
Despite the positive financial outcomes, Northeast Group Berhad is not resting on its laurels. The management is actively navigating a dynamic global business environment and has a clear roadmap for future growth.
Northeast Group Berhad remains cautiously optimistic about its medium-term prospects, anticipating steady progress in the coming quarters. The demand in its core end-markets, including photonics, semiconductor, telecommunications, electrical & electronics, and optoelectronics, continues to present significant growth opportunities. The Group’s strategy is to capitalize on this by strengthening production capabilities and deepening relationships with existing customers.
Key Growth Initiatives:
- Capacity Expansion: Capital investments are on track to boost production capacity. This includes plans for a new factory (slated to begin by Q4 2026 and complete by H2 2029) to house new Computer Numerical Control (CNC) machines. CNC machines are automated machine tools that are programmed to carry out various machining operations with high precision. Additionally, a new warehouse is planned to free up existing factory space for production expansion. These investments aim to enable the Group to produce more complex and higher-value precision engineering components.
- Market Development: Continuous efforts are being made to explore new business opportunities and reinforce ties with current clients, expanding market reach within the precision engineering industry.
- Strategic Acquisitions: The Group recently announced proposed acquisitions of two leasehold lands in Penang for approximately RM16.35 million, expected to be completed in Q4 2025. This further underscores its commitment to future expansion.
Managing External Headwinds:
The report acknowledges potential challenges, particularly the near-term impact of US-imposed tariffs. However, the Group views this as manageable due to its unique high-mix, low-volume business model. This model, coupled with the relatively higher manufacturing costs in the US and similar tariff headwinds faced by many Asia-Pacific competitors, helps mitigate the risk of immediate customer displacement. Management is committed to closely monitoring trade policies and customer sourcing trends, prepared to reassess its footprint, pricing, and commercial strategies if longer-term structural changes emerge.
The utilisation of IPO proceeds is also strategically aligned with these growth plans, with funds allocated for the new factory, land acquisitions, new CNC machines, and debt repayment. While some timelines have been extended, the overall commitment to these investments remains strong.
Summary and Investment Recommendations
As a senior blogger, my role is to provide an objective analysis of Northeast Group Berhad’s latest financial report. It is important to reiterate that this blog post does not constitute, and should not be construed as, investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.
Northeast Group Berhad’s third-quarter report for FY2025 showcases a company in a strong growth phase, underpinned by robust revenue and profit expansion. The significant year-on-year and quarter-on-quarter improvements in key financial metrics, alongside a strengthened balance sheet post-IPO, paint a positive picture of operational efficiency and financial stability. The company’s strategic focus on capacity expansion, market development, and prudent risk management positions it well for navigating future industry dynamics.
However, like any business, there are potential risks and challenges that investors should be aware of. Here are some key points to consider:
- Global Economic Uncertainty: While NGB is confident in its medium-term prospects, the global business environment remains uncertain, which could impact demand for precision engineering components.
- Execution Risk of Expansion Plans: The ambitious plans for a new factory and warehouse, while promising, come with inherent execution risks related to construction timelines, cost overruns, and successful integration of new capacities.
- Geopolitical and Trade Policies: The ongoing monitoring of US-imposed tariffs and broader trade policies is crucial, as significant structural changes could necessitate adjustments to the Group’s global strategy.
- Competitive Landscape: The precision engineering industry is competitive, and NGB must continuously innovate and maintain strong customer relationships to sustain its market position.
Northeast Group Berhad appears to be proactively managing its growth while addressing potential headwinds. The sustained demand from key industries and strategic investments bode well for its long-term trajectory.
What are your thoughts on Northeast Group Berhad’s latest performance and future strategies? Do you believe the company can sustain this impressive growth momentum and effectively manage the outlined risks in the coming years? Share your insights in the comments section below – let’s discuss!
