COSMOS Technology International Berhad Reports Q3FY2026 Results: Revenue Decline but Order Book Remains Strong

Key Highlights for Investors

• Revenue drops 23% year-on-year: Group revenue for the quarter ended 31 January 2026 fell to RM4.0 million from RM5.2 million in the same quarter last year, mainly due to shipment delays from main suppliers.
• Profit before tax rebounds on discontinued operations: Despite lower revenue, the Group posted a profit before tax (PBT) of RM0.43 million, a turnaround from a loss of RM7.2 million in Q3FY2025, primarily due to the elimination of losses from discontinued operations.
• Disposal of loss-making manufacturing subsidiary completed: The disposal of MCI ETech Sdn Bhd (MCI) was finalized on 30 December 2024, with all proceeds already fully utilized.
• Outstanding order book of RM9.9 million: The Group maintains a solid order book, providing earnings visibility for FY2026.
• No dividend recommended: The Board is not recommending any dividend for the current quarter.
• Expansion into new sectors: Cosmos is pursuing opportunities in water treatment plant upgrades and the data centre sector, particularly in Building Management Systems (BMS) and automation control.

Detailed Financial Performance

Q3FY2026 vs Q3FY2025

• Group Revenue: RM4.036 million (Q3FY2026) versus RM5.238 million (Q3FY2025), down 22.9%.
• Distribution Segment: Main contributor to revenue, but impacted by shipment delays from suppliers, which hindered timely order fulfillment.
• Manufacturing Segment: No revenue recognized after the disposal of MCI.
• Gross Profit: RM1.406 million, down from RM1.597 million.
• Profit from Operations: RM0.431 million, compared to RM0.616 million last year.
• PBT: RM0.427 million (Q3FY2026), a significant improvement from a loss of RM7.212 million in Q3FY2025, attributed to the absence of losses from the discontinued manufacturing operations.
• Net Profit: RM0.247 million (Q3FY2026) compared to a net loss of RM7.460 million in Q3FY2025.
• Earnings Per Share (EPS): 0.10 sen (Q3FY2026) vs (2.91) sen (Q3FY2025).

Cumulative 9-Months (FY2026 YTD vs FY2025 YTD)

• Total Revenue: RM12.544 million, down from RM16.406 million (23.5% decline).
• PBT: RM1.638 million, up from a loss of RM8.473 million.
• Net Profit: RM1.011 million, up from a net loss of RM9.262 million in the prior year.
• EPS: 0.41 sen versus (3.62) sen.

Balance Sheet Strength and Cash Flow

• Net Assets Per Share: 17.17 sen (unchanged from April 2025).
• Cash & Cash Equivalents: RM22.3 million as at 31 January 2026, down from RM25.2 million at the start of the period.
• Borrowings: Zero bills payable as at 31 January 2026 (RM1.5 million previously).
• Lease Liabilities: RM358,000, down from RM429,000.
• Utilization of Proceeds from MCI Disposal: All RM12.31 million from the disposal of MCI has been fully utilized, primarily for working capital, staff costs, administrative expenses, and selling/marketing expenses.

Operational & Strategic Updates

• Water Sector Transformation 2040: Cosmos stands to benefit from government initiatives and increased capital expenditure by state water operators, especially in Selangor, Johor, Kedah, and Pahang.
• NRW Reduction Initiatives: Active participation in tenders for non-revenue water (NRW) reduction, including supply of advanced meters, pressure management systems, and data loggers.
• Recent Contract Wins: Secured a Letter of Acceptance from Ranhill SAJ Sdn Bhd for water asset equipment and spare parts in Johor (contract started December 2025); more orders anticipated.
• Diversification: Pursuing growth in data centres (BMS, IT infrastructure management) and AI-driven automation for water treatment SCADA systems. Participated in tenders in Selangor, Terengganu, and Negeri Sembilan.

Other Notable Items for Shareholders

• No dividends, new debt, or material litigation: No dividend was declared, no new borrowings, and no major legal cases as of the report date.
• Tax rate elevated: Effective tax rate for the period was 42.2%, above the statutory 24%, due to prior-year under-provision, certain non-deductible expenses, and subsidiary losses.
• Zero derivative exposure and no pending corporate proposals.

What Could Move the Share Price?

• Order Book Strength: The current outstanding order book of RM9.9 million provides earnings visibility, which is positive for share price stability and growth potential.
• Exposure to Government Initiatives: Participation in the Water Sector Transformation 2040 and NRW projects could result in significant contract wins and revenue increases.
• Disposal of Loss-Making Subsidiary: The completed disposal of MCI removes a major drag on earnings, immediately improving profitability and potentially supporting a rerating of the shares.
• New Market Entry: Expansion into data centres and automation systems for water treatment plants introduces new revenue streams with high growth potential.
• Risks: Investors should note ongoing supply chain risks (e.g., Middle East conflicts) and shipment delays, which could impact future quarters.

Conclusion

Cosmos Technology International Berhad has stabilized its business following the disposal of its loss-making manufacturing subsidiary and is now focused on leveraging government-driven water sector projects for future growth. The strong cash position, debt-free balance sheet, and steady order book provide a solid foundation. However, investors should monitor for further contract wins, the company’s ability to address shipment delays, and expansion into new technology-driven sectors, which could be key catalysts for future share price movements.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a professional advisor before making investment decisions. The author and publisher accept no liability for actions taken based on this article.

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