TSH Resources Berhad Q2 2025 Financial Review: Strong Momentum and Positive Outlook

TSH Resources Berhad delivered an impressive set of results for the second quarter and year-to-date ended 30 June 2025. This analysis covers the key financial highlights, performance trends, segmental analysis, cash flow, capital management, and management commentary, providing actionable insights for investors.

Key Financial Metrics & Quarter/Year Comparisons

Historical Performance Trends

• Revenue Growth: Year-to-date revenue rose 10% to RM544.1 million from RM494.9 million, driven largely by the Palm Products segment.
• Profit Momentum: Year-to-date profit before tax surged 111% to RM150.0 million, as compared to RM71.0 million last year. This was partially boosted by the absence of a one-off depreciation charge related to a terminated land disposal in Q2 2024.
• Earnings Per Share (EPS): EPS more than doubled year-over-year, reflecting the strong profit rebound.

Segmental Analysis

Palm Products: The Palm Products segment accounted for the bulk of revenue and profit, benefiting from increased sales volumes and higher palm kernel (PK) selling prices. Average CPO prices were stable YoY, while PK prices jumped 47% for the quarter and 56% YTD. Operating profit for Palm Products improved 34% YoY for Q2 and 53% YTD.

Others: The Others segment (electricity, wood products) saw lower sales and higher operating losses, mainly due to weaker demand and inventory write-downs.

Exceptional Items and Related Party Transactions

• One-off Depreciation: A RM22 million prior period charge affected Q2 2024, not repeated in 2025.
• Share Buybacks: The company repurchased RM64.9 million worth of shares, increasing treasury shares held to 70.8 million shares.
• Related Party Transactions: Major sales to joint ventures include RM124.96 million in crude palm oil and RM26.5 million in palm kernel.

Cash Flow and Capital Management

• Operating Cash Flow: Net cash from operations climbed to RM165.1 million YTD, up from RM109.2 million last year.
• Investing Activities: Outflows for capex and investments totaled RM19.3 million YTD, reflecting ongoing growth initiatives.
• Financing Activities: Net outflow of RM65.8 million, largely due to share buybacks and term loan repayments; no dividends paid in the period.
• Net Cash Position: The group has a strong cash and cash equivalents balance of RM327.3 million at period end.

Balance Sheet & Capital Commitments

• Total Assets: RM2.68 billion
• Total Equity: RM2.20 billion
• Capital Commitments: RM206.1 million approved (contracted and not contracted) for future expenditure, indicating ongoing investment in growth.
• Borrowings: Total borrowings of RM251.6 million, with a majority in RM denomination and secured/unsecured lines clearly disclosed.

Dividend Policy

No interim or final dividend was proposed or paid during Q2 2025 or year-to-date. This is unchanged from the previous corresponding period.

Management Commentary & Outlook

“CPO prices showed a modest recovery in July 2025, averaging above RM4,000 per metric ton following a decline earlier in Q2. Prices are projected to remain relatively stable in the second half of the year. The rebound was supported by stronger export demand, stabilised inventory levels, and improved price competitiveness against soybean oil. Additionally, the U.S. government’s proposed expansion of biofuel mandates is expected to drive up soybean oil prices, which could indirectly boost the competitiveness of palm oil. However, ongoing U.S. tariff actions targeting key trading partners may introduce market volatility and disrupt global trade flows, posing downside risks to the outlook.

Despite external challenges, the Group maintains a positive long-term outlook. Its strong balance sheet, net cash position as of Q2 2025, and consistent cash flow provide a solid foundation for future growth. The Group is progressing with its new planting programme, which is set to expand planted hectarage over the coming years, supporting future productivity and enhancing shareholder value.

With its operational resilience and prudent financial management, the Group remains confident in delivering a satisfactory full-year performance in 2025.”

Tone: The statement is clearly positive, highlighting resilience, cash strength, and steady expansion. Management is aware of external risks but remains confident in the outlook.

Events & Corporate Actions Affecting the Business

• No material litigation, corporate proposals, or divestments were reported for the period.
• Capital commitments are substantial, indicating a focus on expansion.
• No asset revaluations, fundraising, or restructuring events were mentioned.

Conclusion & Investment Recommendations

Performance Summary: TSH Resources Berhad has delivered a strong financial performance in Q2 and the first half of 2025, with significant profit growth, robust cash flows, and a solid balance sheet. The Palm Products segment continues to drive results, and management remains confident about the full-year prospects despite external uncertainties.

If you currently hold the stock: Consider maintaining your position. The company’s operational strength, net cash position, and continued investment in growth bode well for future performance. However, monitor for external risks such as trade policy changes and commodity price volatility.

If you do not currently hold the stock: TSH Resources presents an attractive entry point for long-term investors seeking exposure to palm oil and agribusiness, given its strong profitability trends and positive outlook. As with all cyclical commodity plays, consider potential volatility and monitor macro and regulatory developments.

Disclaimer: This analysis is based solely on financial data and disclosures in the company’s Q2 2025 report. It does not constitute investment advice. Investors should consider their own risk profile and seek professional advice before making investment decisions.

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