Concrete Engineering Products Berhad (CEPCO): Second Quarter 2026 Financial Report – Key Highlights for Investors

1. Financial Performance Overview

• Revenue: CEPCO recorded a revenue of RM10.68 million for the quarter ended 28 February 2026, marking a slight increase of 1.69% compared to the same period last year. However, revenue decreased by 18.35% versus the preceding quarter, mainly due to shipment delays during festive periods.
• Gross Profit: Gross profit surged significantly year-on-year to RM3.74 million, a 287.67% increase from RM965,000 in the same period last year. The improvement is attributed to enhanced cost efficiencies and a more favourable product mix.
• Operating Profit: CEPCO posted an operating profit of RM610,000 for the current quarter, a substantial turnaround from a loss of RM2.84 million in the corresponding quarter last year. This also represents a 212.82% increase compared to the preceding quarter.
• Extraordinary Items: The quarter saw a RM2.04 million increase in fair value of quoted investments, contributing to the overall profit before taxation of RM2.65 million.
• Net Profit: Profit after taxation for the quarter was RM2.64 million, compared to a loss of RM2.57 million in the same quarter last year. However, the cumulative year-to-date result remains a loss of RM236,000, though this is a marked improvement from the RM8.56 million loss for the same period last year.
• Basic Earnings Per Share: EPS improved to 3.54 sen for the quarter, compared to a loss per share of 3.44 sen in Q2 2025.
• Net Assets Per Share: Net assets per share remained stable at RM1.17.

2. Financial Position & Cash Flows

• Total Assets: CEPCO’s total assets stood at RM138.87 million as at 28 February 2026, up RM1.96 million from 30 November 2025. This increase was mainly due to higher inventories and gains from other investments.
• Equity: Equity attributable to owners was RM87.10 million, with retained profits decreasing to RM2.50 million.
• Borrowings: Total borrowings decreased to RM5.20 million from RM6.83 million at the previous year-end, reflecting prudent capital management.
• Cash & Cash Equivalents: Cash and cash equivalents declined by RM0.87 million during the quarter, primarily due to payments to trade payables.
• Operating Cash Flows: The Group reported net cash used in operating activities of RM4.65 million for the six months, offset by RM6.53 million net cash generated from investing activities, mainly proceeds from disposal of investment properties.

3. Corporate Developments – Price Sensitive Event

• Mandatory Take-Over Offer:
  • On 1 April 2026, CEPCO’s Board received a notice from CIMB Investment Bank Berhad, acting for YTL Cement Berhad, regarding an unconditional mandatory take-over offer for all remaining ordinary shares in CEPCO not already held by YTL Cement Berhad.
  • The offer was triggered by YTL Cement’s acquisition of a 53.49% equity stake in CEPCO, at a cash consideration of RM2.60 per share.
  • The take-over offer is unconditional and not subject to any minimum level of acceptances, potentially impacting the share price and ownership dynamics.
  • An independent adviser has been appointed, and shareholders will receive the offer document and independent advice circular in due course.

4. Litigation & Other Notable Matters

• Material Litigation:
  • A suit concerning alleged trespass by CEPCO’s Rawang factory onto Reliance Foundry’s land was withdrawn following a settlement on 12 August 2025.
  • CEPCO is required to complete rectification works, including constructing a boundary wall. Failure to do so could result in further legal action, but the matter is not expected to have any material financial effect for FY2026.
• Dividends: No dividends were declared or recommended for the current quarter.
• Accounting Changes: Recent and upcoming changes to accounting standards (MFRS) are noted, but have not materially impacted the Group’s financial statements.
• Operational Focus: The Group remains committed to operational efficiency and cost optimisation initiatives, given ongoing challenges such as rising energy and logistics costs, and global economic uncertainty.

5. Outlook & Risks

• The Group expects the operating environment for FY2026 to remain challenging, with persistent geopolitical tensions, supply chain disruptions, and elevated energy prices. Domestic construction activity may offer some support, but global demand remains subdued.
• CEPCO will focus on prudent capital management and operational resilience to mitigate external headwinds.

6. Key Takeaways for Shareholders

• Mandatory Take-Over Offer is highly price sensitive and could move CEPCO’s share price significantly. Shareholders should await further communications and independent advice.
• The Group’s financial turnaround in Q2 2026, with improved profitability and margins, may support positive sentiment, although cumulative results remain negative.
• Ongoing litigation has been settled, but compliance with settlement terms is required.
• No dividend payout for the period; cash flows are being managed prudently.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should consult professional advisers and review the full official financial documents before making any investment decision. The information herein is based on unaudited interim financial statements and is subject to change.

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