Benalec Holdings Berhad: A Quarter of Strategic Shifts Amidst Market Realities (Q2 FY2025 Report)
Hello fellow investors and market watchers! Today, we’re diving into the latest unaudited interim financial report for Benalec Holdings Berhad for its Second (2nd) Quarter ended 30 June 2025. Benalec, a name often associated with marine construction and land reclamation, has just released figures that paint a mixed but strategically focused picture.
On one hand, the company demonstrated impressive profit growth in the latest quarter, signaling effective operational management. On the other, the year-to-date revenue figures suggest a landscape shaped by market challenges and a deliberate shift in strategy. What does this mean for Benalec and its future trajectory? Let’s break it down to help you understand the core of their performance and outlook.
Key Takeaway: While year-to-date revenue saw a decline due to lower land disposal activities, Benalec achieved a significant surge in both quarterly and year-to-date Pre-Tax Profit and Earnings Per Share, driven by strong land reclamation performance and effective cost management. The company is actively pursuing a more conservative and strategic approach to monetise its assets and replenish its order book.
Core Financial Highlights: Navigating Growth and Challenges
Strong Quarterly Profit Growth (Q2 2025 vs. Q2 2024)
Benalec Holdings Berhad delivered a robust performance in the current quarter, showcasing a substantial increase in its bottom line compared to the same period last year. This growth was primarily fueled by higher land reclamation revenue.
Current Quarter (30 June 2025)
Revenue: RM15.45 million
Pre-Tax Profit (PBT): RM3.39 million
Net Profit for the Period: RM3.12 million
Basic Earnings Per Share: 0.33 sen
Preceding Year Quarter (30 June 2024)
Revenue: RM12.81 million
Pre-Tax Profit (PBT): RM2.23 million
Net Profit for the Period: RM2.23 million
Basic Earnings Per Share: 0.24 sen
The company’s revenue for the current quarter rose by approximately 20.56% to RM15.45 million, mainly attributed to increased land reclamation revenue recognition, which climbed from RM8.27 million in the preceding year quarter to RM15.45 million. This boosted gross profit and, coupled with an increase in other operating income (including unrealised foreign exchange gains), contributed to a significant 51.59% surge in Pre-Tax Profit (PBT) to RM3.39 million.
Year-to-Date Performance: Profitability Surges Amidst Revenue Reset
Looking at the cumulative six-month period, Benalec’s performance presents a more nuanced picture. While overall revenue saw a notable decrease, the company managed to achieve an impressive increase in profitability.
| Metric | YTD 30 June 2025 (RM’000) | YTD 30 June 2024 (RM’000) | Change (RM’000) | Percentage Change |
|---|---|---|---|---|
| Revenue | 30,061 | 50,195 | (20,134) | -40.11% |
| Pre-Tax Profit (PBT) | 5,578 | 1,370 | 4,208 | +307.15% |
| Net Profit for the Period | 5,317 | 1,370 | 3,947 | +288.10% |
| Basic Earnings Per Share (sen) | 0.56 | 0.20 | 0.36 | +180.00% |
The year-to-date revenue declined by 40.11% to RM30.06 million. This decrease was primarily due to lower land and infrastructure disposal revenue recognition compared to the previous year (Q2’25: RM0.18 million vs Q2’24: RM22.17 million). However, the Group’s PBT for the six-month period soared by 307.15% to RM5.58 million. This remarkable improvement in profitability was largely driven by a significant decrease in administrative and other expenses (including the reclassification of quit rent & assessment and lower depreciation), alongside a reduction in finance costs, which more than offset the decrease in gross profit and other operating income.
Quarter-on-Quarter Momentum (Q2 2025 vs. Q1 2025)
Comparing the current quarter with the immediate preceding quarter (Q1 2025) reveals a positive sequential growth momentum.
| Metric | Q2 2025 (RM’000) | Q1 2025 (RM’000) | Change (RM’000) | Percentage Change |
|---|---|---|---|---|
| Revenue | 15,449 | 14,612 | 837 | +5.73% |
| Pre-Tax Profit (PBT) | 3,385 | 2,193 | 1,192 | +54.35% |
Benalec’s revenue in Q2 2025 saw a healthy 5.73% increase over Q1 2025, reaching RM15.45 million. This was once again primarily driven by higher land reclamation revenue. Consequently, PBT surged by an impressive 54.35% to RM3.39 million quarter-on-quarter, mainly due to the increase in gross profit from the land reclamation activities.
Diving Deeper: Business Segments and Financial Health
The segmental report clearly shows that Marine Construction – Land Reclamation remains the primary revenue driver for the Group. The significant year-to-date revenue decline reflects the lower contribution from Land Disposal, highlighting the strategic shift mentioned in the prospects section.
From the balance sheet as at 30 June 2025, total assets saw a slight decrease to RM614.23 million from RM618.65 million at the end of 2024. However, total equity attributable to owners of the parent saw a modest increase from RM372.66 million to RM376.90 million, reflecting the positive profit for the period. Net assets per share improved slightly from RM0.36 to RM0.37.
Cash flow from operating activities for the year-to-date period significantly decreased to RM6.64 million from RM46.29 million in the preceding year-to-date period. This substantial change requires attention, even though net cash used in investing and financing activities also saw significant reductions. It’s important to note that the cash and cash equivalents at the end of the period remained negative at RM(1.08) million, primarily due to bank overdrafts and pledged deposits, though it represents an improvement from RM(7.44) million in the previous year.
Regarding shareholder returns, the Board has stated that no interim dividend was recommended for the current period ended 30 June 2025. This aligns with a more conservative approach the company is adopting.
Risks and Prospects: A Cautiously Optimistic Path Ahead
Despite the prevailing economic uncertainties and operational challenges, Benalec’s Board and Management maintain a cautiously optimistic outlook. Their current strategy is focused on a more conservative yet proactive approach:
- Monetisation Focus: Prioritising the marketing and sale of existing “Inventory – Land Held For Sale.”
- Order Book Completion: Concentrating on completing the current order book, particularly those with cash settlements.
- “Sell-Then-Build” Strategy: Adopting this approach for the remaining unreclaimed land, aiming for in-kind settlements where feasible.
These initiatives are expected to generate approximately RM50.82 million in near-term revenue, comprising RM25.67 million from land reclamation contracts and RM25.15 million from signed Land Sale & Purchase Agreements. Furthermore, management is actively tendering for new, viable projects to ensure a consistent income stream and replenish their order book.
Benalec holds a substantial land bank of over 37.06 acres in Melaka and 41.71 acres in Pulau Indah, Port Klang, which are already reclaimed and available for immediate sale. The company plans to aggressively market these assets, adapting to market requirements to ensure their monetisation in the near to medium term.
The Group also highlights the strong fundamentals of its flagship projects in Johor, the Tanjung Piai Maritime Industrial Park (TPMIP) and Pengerang Maritime Industrial Park (PMIP). These strategic locations are well-positioned to capture value-added activities in the oil & gas and renewable energy sectors. Management is actively engaging in financial negotiations with prospective off-takers, buyers undergoing due diligence, and partners conducting feasibility studies for these projects.
The company acknowledges the sector-wide slowdown and is adjusting its operations accordingly, striving to remain vigilant, innovate, adapt, and create value for its customers.
Summary and Investment Recommendations
In summary, Benalec Holdings Berhad’s Q2 FY2025 report reveals a company undergoing a strategic recalibration. While year-to-date revenue faced headwinds from reduced land disposal, a significant improvement in profitability, both quarterly and year-to-date, highlights effective cost management and strong performance in its core land reclamation business. The focus on monetising existing land banks, securing cash-settled contracts, and exploring new project opportunities underscores a prudent yet forward-looking strategy. It’s clear that the company is adapting to market conditions by streamlining operations and strategically positioning its assets.
(Please note: This blog post provides an analysis of Benalec Holdings Berhad’s financial report and is for informational purposes only. It does not constitute any form of investment advice, recommendation to buy, sell, or hold any securities.)
However, like any investment, it’s essential to consider the potential risks. Based on the report and general market observations, some key risk points to consider might include:
- Market Demand for Land: The success of the “monetise existing inventory” and “sell-then-build” strategies heavily relies on sustained demand for reclaimed land in a potentially uncertain property market.
- Execution Risk of New Projects: While actively tendering and pursuing leads, the conversion of these efforts into secured contracts and revenue streams can be subject to market competition, regulatory approvals, and project financing.
- Fluctuations in Foreign Exchange: As seen in the report, foreign currency translations can significantly impact overall comprehensive profit/loss, indicating exposure to exchange rate volatility.
- Cash Flow Management: Despite an improvement in cash and cash equivalents, the overall negative position at the period-end, primarily due to bank overdrafts and pledged deposits, suggests ongoing attention is needed for liquidity management.
- Industry Cyclicality: The marine construction and property development sectors are often cyclical, and a prolonged economic slowdown could impact project pipelines and asset valuations.
What’s Your Take?
Benalec’s Q2 FY2025 report paints a picture of resilience and strategic adaptation. They’re clearly steering through a challenging environment with focused objectives. Do you think their “sell-then-build” and asset monetisation strategies will be enough to propel them forward in the coming years? Share your thoughts in the comments below!
For more in-depth analyses of Malaysian companies and market trends, make sure to check out our other articles.
