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BusinessToday
29-05-2025
- Business
- BusinessToday
NexG's Decision To Diversify Could Open New Revenue Streams
MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its BUY call on Nexg Bhd with an unchanged target price of RM0.58, following the release of the group's full-year FY25 results. While fourth-quarter earnings were weaker due to softer demand for smart card and passport services, MIDF Research said the company's overall performance remained on an expansionary track, registering a +12.5% year-on-year increase in normalised full-year earnings. For 4QFY25, Nexg posted a normalised net profit of RM30.9 million, down 19.3% from the same period last year, as revenue fell 15% to RM88.1 million due to lower supply of smart cards and personalisation services. Despite the quarterly dip, MIDF Research said the full-year earnings performance met its expectations, contributing 103.5% to its full-year forecast, although slightly below consensus estimates at 103.3%. Cumulatively, FY25 normalised net profit rose to RM101.1 million, underpinned by modest revenue growth of +1.4% year-on-year to RM373.5 million, coupled with a -4.1% decline in operating expenses to RM236.5 million. This led to improved profit margins, which MIDF Research said reflect better cost efficiency and operational discipline. Looking ahead, MIDF Research expects revenue to continue rising in the coming quarters, driven by ongoing contract extensions for existing services and potential new project wins. The research house said Nexg's strategic focus on expanding its non-government income stream would diversify its revenue base and reduce risk exposure, placing the group on stronger footing for sustainable growth. MIDF Research left its earnings projections for FY26 to FY28 unchanged, as well as its target price, which is based on a CY25 earnings per share estimate of 3.7 sen and a target price-to-earnings ratio of 15.6 times. Financially, Nexg ended the quarter with a net cash position of RM20.9 million, reversing a net debt of RM31.2 million a year ago. The improvement was supported by higher cash reserves of RM73.2 million, a 155.9% increase year-on-year, and lower borrowings of RM52.3 million, down 12.6% from 1Q24. MIDF Research concluded that while short-term headwinds remain, the group's fundamentals and strategic direction justify a positive investment stance. Related
BusinessToday
29-05-2025
- Business
- BusinessToday
Synergy House's Profit Plunges 73% To RM2.4 Million Despite Higher Revenue
Cross-border e-commerce seller and exporter of ready-to-assemble home furniture, Synergy House Bhd, net profit for the first quarter ended March 31, 2025 (1Q25) experienced a significant drop despite the group achieving a higher revenue figure for the quarter. For 1Q25, the group's net profit decreased by 72.8% to RM2.45 million from RM9.01 million. This is despite the group recording revenue of RM88.1 million, a 5.3% increase from RM83.7 million in the corresponding period last year. This was underpinned by a strong performance in the group's business-to-consumer (B2C) segment. The group's B2C revenue soared 17.3% year-on-year to RM51.2 million, up from RM43.7 million in the corresponding quarter last year. This performance was fuelled by strong demand from North America, Europe and Malaysia, as Synergy House continues to expand its presence on major e-commerce platforms and tap into evolving consumer trends. The positive momentum in B2C helped partially offset a 7.8% contraction in business-to-business (B2B) revenue, which stood at RM36.9 million compared to RM40 million in 1Q24. The B2B segment faced headwinds from geopolitical tensions in Europe and Asia, although North American markets remained resilient. Despite the profit dip, Synergy House Executive Director Tan Eu Tah said the group's financial position remains strong. 'As of March 31, 2025, the group reported shareholders' funds of RM126.2 million, a net gearing ratio of just 0.09 times and a healthy current ratio of 1.9 times. 'The group also held RM59.9 million in cash, bank balances and short-term investments, reinforcing its liquidity and ability to navigate short-term obligations,' Tan said, adding that the group will maintain a cautiously optimistic outlook for the remainder of FY25. 'We are sharpening our B2C strategy by diversifying across more e-commerce platforms and expanding into premium product categories that align with shifting consumer preferences. 'Our investment in artificial intelligence and market intelligence tools is equipping us with real-time insights to respond faster and smarter,' he said. While the near-term outlook remains clouded by macro and geopolitical risks, Tan said Synergy House is anchoring its strategy on digital transformation, product innovation and resilient e-commerce channels. 'We are committed to responsible growth that delivers long-term value to our stakeholders. 'By blending innovation with operational discipline, we aim to strengthen our position as a global player in the online furniture retail space,' Tan added. Related
