Greetings, fellow investors and market watchers! Today, we’re diving into the latest quarterly report from SERN KOU RESOURCES BERHAD for the fourth quarter ended 30 June 2025. In an environment marked by shifting market dynamics and specific operational hurdles, the company has shown a mixed but largely improving financial picture, especially when looking at the full year. While the current quarter faced a few bumps, the twelve-month performance paints a more optimistic story, with significant reductions in losses and a noteworthy turnaround in operating profit.
Join me as we break down the numbers, understand the underlying reasons, and explore what this means for SERN KOU RESOURCES BERHAD moving forward. This report isn’t just about figures; it’s about resilience and strategic adjustments in a challenging landscape.
Financial Performance Overview: Navigating Headwinds and Finding Tailwinds
Let’s first examine the headline figures, looking at both the most recent quarter and the full financial year. The company’s performance, while complex, reveals a clear effort to improve its bottom line despite external pressures.
Quarterly Performance: A Closer Look
For the fourth quarter ended 30 June 2025, SERN KOU RESOURCES BERHAD saw an increase in revenue but a shift to a gross loss, impacting its short-term profitability. However, compared to the same period last year, the company significantly reduced its overall losses.
Current Quarter (3 Months Ended 30-Jun-25)
Revenue: RM148.6 million
Gross (Loss)/Profit: (RM39 thousand)
Operating (Loss)/Profit: (RM4.5 million)
Loss Before Taxation: (RM6.2 million)
Loss After Taxation: (RM7.4 million)
Loss per Ordinary Share: (0.65 sen)
Same Period Last Year (3 Months Ended 30-Jun-24)
Revenue: RM134.7 million
Gross (Loss)/Profit: RM1.0 million
Operating (Loss)/Profit: (RM9.5 million)
Loss Before Taxation: (RM11.1 million)
Loss After Taxation: (RM12.6 million)
Loss per Ordinary Share: (1.10 sen)
Revenue for the quarter increased by 10% to RM148.6 million, driven by an uptick in product demand across all segments. However, a gross profit of RM1.0 million in the same period last year turned into a gross loss of RM39 thousand this quarter, reflecting narrower product margins and increased costs. Despite this, the company significantly reduced its loss before taxation by 44%, from RM11.1 million to RM6.2 million, primarily due to an 85% reduction in impairment losses on property, plant and equipment.
Full-Year Performance: A Resilient Comeback
The full-year results paint a more encouraging picture, demonstrating SERN KOU RESOURCES BERHAD’s ability to improve its core financial health over a longer horizon.
Full Year (12 Months Ended 30-Jun-25)
Revenue: RM486.7 million
Gross Profit: RM17.9 million
Operating (Loss)/Profit: RM2.0 million
Loss Before Taxation: (RM4.8 million)
Loss After Taxation: (RM7.0 million)
Loss per Ordinary Share: (0.55 sen)
Preceding Financial Year (12 Months Ended 30-Jun-24)
Revenue: RM493.8 million
Gross Profit: RM11.8 million
Operating (Loss)/Profit: (RM7.8 million)
Loss Before Taxation: (RM13.0 million)
Loss After Taxation: (RM15.2 million)
Loss per Ordinary Share: (1.29 sen)
While full-year revenue saw a slight 1% decrease to RM486.7 million (attributed to severe floods in Kelantan disrupting timber supply), the company achieved a significant 51% increase in gross profit, reaching RM17.9 million. More impressively, operating activities turned profitable, moving from a loss of RM7.8 million to a profit of RM2.0 million – a 126% improvement. This helped to reduce the full-year loss before taxation by 63% to RM4.8 million, and net loss after taxation by 54% to RM7.0 million. This turnaround was largely driven by the sale of high-value wood species and RM1.8 million in fire insurance compensation received during the third quarter.
Segmental Performance: A Tale of Two Divisions
Breaking down the performance by segment provides deeper insights into the company’s operational strengths and challenges.
| Segment | Revenue (RM’000) | Loss Before Taxation (RM’000) | ||
|---|---|---|---|---|
| 12 Months Ended 30-Jun-25 | 12 Months Ended 30-Jun-24 | 12 Months Ended 30-Jun-25 | 12 Months Ended 30-Jun-24 | |
| Manufacturing and Trading of Furniture | 41,869 | 39,845 | (10,235) | (16,157) |
| Processing and Trading of Wood | 444,830 | 453,924 | 4,833 | 2,227 |
| Investment Holding | – | – | 640 | 939 |
The Manufacturing and Trading of Furniture segment saw its revenue increase to RM41.9 million for the full year. This was primarily attributed to accelerated shipments to capitalize on a 90-day suspension of US import tariffs, which ended on 4 July 2025. Despite an improved normalised loss before taxation of RM11 million (after adjusting for impairment losses and insurance compensation), sustained high operating costs remain a challenge. The segment recognized an impairment loss of RM828 thousand in the current period, significantly lower than the RM6 million in the preceding year. A final fire insurance compensation payment of RM1.8 million was also received, bringing the total to RM11 million, which was utilized for factory reconstruction and machinery purchase.
The Processing and Trading of Wood segment experienced a slight revenue decrease to RM444.8 million for the full year, mainly due to the aforementioned Kelantan floods. However, this segment was the star performer, with profit before taxation more than doubling to RM4.8 million from RM2.2 million in the preceding financial year. This strong growth was primarily due to the sale of high-value wood species, which significantly boosted operating profit margins. The individual quarter saw a loss before taxation of RM500 thousand, mainly due to lower product margins adopted to stimulate sales.
The Investment Holding segment saw its profit before taxation decrease slightly to RM640 thousand for the full year.
Financial Health: Balance Sheet and Cash Flow
Looking at the balance sheet, total assets remained relatively stable at RM372.6 million. However, total equity slightly decreased to RM214.3 million, and total liabilities increased to RM158.3 million. Net assets per share saw a minor dip from RM0.21 to RM0.20.
A crucial highlight is the cash flow from operating activities, which turned positive, generating RM3.5 million for the full year, a significant improvement from the RM24.7 million cash used in operations in the preceding year. This positive shift indicates better operational efficiency in generating cash. While cash used in financing activities turned into an outflow (RM3.9 million), the overall net decrease in cash and cash equivalents was reduced compared to the previous year, standing at RM11.2 million.
Navigating the Future: Risks and Prospects
SERN KOU RESOURCES BERHAD acknowledges that the path ahead remains uncertain. The Group anticipates continued market volatility and uncertainties in both domestic and global markets.
For the furniture segment, the focus will be on leveraging the reduced US tariff rate of 19% (which is more favorable than Vietnam’s) to capture additional orders and enhance its competitive edge in key export markets. However, the unpredictable external environment necessitates agile strategy formulation and execution.
On the domestic front, operational costs are projected to rise due to the expanded Sales and Service Tax (SST) coverage and the new 2% EPF contribution requirement for foreign workers. These factors will undoubtedly pressure profit margins.
In response, the company’s mitigation strategies involve maintaining vigilance, promptly adapting to regulatory and market changes, and relentlessly pursuing continuous operational improvements to offset the increasing cost pressures. This proactive approach is essential for sustaining performance in a dynamic environment.
Summary and Investment Recommendations
SERN KOU RESOURCES BERHAD’s latest quarterly report presents a nuanced financial picture. While the current quarter saw increased revenue, it also recorded a gross loss due to strategic margin adjustments and ongoing operating costs. However, the full-year performance demonstrates significant improvements, particularly in gross profit, a turnaround to operating profit, and a substantial reduction in overall losses. The Processing and Trading of Wood segment was a key driver of this improvement, benefiting from higher-value sales, while the Furniture segment grapples with high operational costs despite revenue growth and insurance compensation.
Looking ahead, the company faces external market volatility and rising domestic operational costs. Its strategies, focusing on leveraging market advantages and operational efficiency, will be crucial in navigating these challenges. The positive shift in operating cash flow is a welcome sign of improved efficiency.
Key points for investors to monitor include:
- The company’s ability to maintain and further improve profitability in the Processing and Trading of Wood segment amidst potential timber supply disruptions.
- The success of the Furniture segment in leveraging the US tariff advantage and effectively managing its persistent high operating costs.
- The impact of increased domestic operational costs (SST, EPF for foreign workers) on overall margins and the effectiveness of the company’s cost mitigation strategies.
- How the company’s overall financial health, including its balance sheet and cash reserves, will evolve in response to these internal and external factors.
What are your thoughts on SERN KOU RESOURCES BERHAD’s performance this quarter? Do you believe their strategies are robust enough to overcome the anticipated market volatility and rising costs? Share your insights and perspectives in the comments section below!
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