TSA Group Berhad Q1 2026 Financial Results: Key Highlights and Investor Considerations
Summary of Performance for Q1 2026
- Revenue and Profitability:
- Revenue for Q1 2026 registered at RM61.5 million, a decrease of 3.6% from RM63.8 million in Q1 2025. This reduction is primarily attributed to lower average selling prices and softer market demand.
- Gross Profit (GP) fell 6.7% to RM13.2 million from RM14.2 million in the previous year’s corresponding quarter.
- Profit Before Tax (PBT) dropped sharply by 34.9% to RM3.7 million (Q1 2025: RM5.7 million), with Profit After Tax (PAT) plunging 49.3% to RM2.2 million (Q1 2025: RM4.3 million).
- Earnings per Share (EPS) was 0.70 sen, down from 1.39 sen in Q1 2025.
- Dividend:
- The Board declared an interim single-tier dividend of 1 sen per share, payable on 22 June 2026. This reflects the company’s continued commitment to shareholder returns despite a challenging quarter.
- Balance Sheet and Financial Position:
- Total assets increased slightly to RM262.3 million as at 31 March 2026, compared to RM260.1 million as at 31 December 2025.
- Net assets per share stood at RM0.59 as at 31 March 2026.
- Group borrowings rose to RM51.7 million (from RM44.2 million at 31 December 2025), mainly due to a significant drawdown on onshore foreign currency loans.
- Cash and cash equivalents at the end of Q1 2026 stood at RM51.3 million, down from RM53.6 million at the start of the quarter, reflecting higher capital expenditure and dividend payments.
- Operational and Strategic Developments:
- The Group commenced construction works for a new manufacturing facility in Semenyih in March 2026, aimed at supporting future production of cold-rolled stainless steel coils.
- TSA Group’s new granite quarry venture, established in 2025, is expected to provide additional revenue streams from the second half of 2026. Pre-operational expenses for this new business have contributed to higher administrative costs this quarter.
- Segmentally, revenue remains overwhelmingly domestic (Malaysia: 87.6%), with the remainder from overseas markets (12.4%).
- Taxation:
- The Group’s effective tax rate for Q1 2026 was 42%, significantly higher than the statutory rate of 24%. This is due to pre-operational expenditures for the new quarry business and non-deductible expenses such as finance costs and professional fees.
Material Litigation Updates
- Legal Recovery and Ongoing Proceedings:
- TSA Industries (a subsidiary) has successfully recovered RM3.26 million from defendant bank accounts in a long-running misappropriation case. All funds in the relevant defendant banks have been recovered. No further financial loss is anticipated from this matter.
- In an Admiralty suit regarding cargo lost at sea (annealing furnace and parts), TSA Industries’ claim and the vessel’s counterclaim were both dismissed by the High Court, with TSA Industries awarded RM100,000 in costs. TSA Industries has appealed, and the seller has agreed to provide replacement equipment at no cost, mitigating financial risk. An insurance claim has also been filed, and any recovery will be remitted (less costs) to the seller.
Other Key Updates and Corporate Actions
- No new corporate proposals were announced this quarter.
- No purchase or disposal of quoted securities during the period.
- No change in group composition.
- No significant related party transactions or contingent liabilities/assets were noted.
Forward-Looking Prospects
- The Group remains focused on expanding its core trading and manufacturing businesses in stainless steel and metal products.
- The new quarry business is expected to start contributing revenue in the second half of 2026.
- The management is adopting a cautious and flexible approach in response to volatile market conditions both domestically and globally.
Important and Potentially Price-Sensitive Issues for Investors
- Declining Profits: The sharp fall in PBT and PAT, coupled with reduced revenue and gross profit, signals a tougher operating environment and could exert downward pressure on the share price.
- High Effective Tax Rate: The effective tax rate of 42% (well above the 24% statutory rate) may negatively impact net profits in the near term.
- Increased Borrowings: The significant increase in borrowings to finance expansion could raise gearing levels and interest costs, which may concern risk-averse investors.
- Dividend Continuity: Despite the profit decline, the Board’s decision to maintain dividends may provide support to the share price in the short term, though sustainability will depend on future earnings recovery.
- Potential Upside from New Ventures: The granite quarry business and expanded manufacturing facility could offer new growth avenues from 2H2026 onwards, which may drive future valuation if these ventures prove successful.
- Litigation Risk Managed: The resolution of legacy litigation and recovery of misappropriated funds, along with insurance and supplier guarantees for lost cargo, reduces the risk of significant unexpected losses.
Conclusion
TSA Group Berhad faces a transitional period with short-term earnings under pressure from market softness, higher costs, and pre-operational outlays for new ventures. Nevertheless, the Group’s ongoing investments in new facilities and business lines, coupled with its prudent approach to legal and financial risks, position it for potential recovery and growth in the medium term. Investors should monitor execution on the new quarry and manufacturing projects, as well as the Group’s ability to restore profitability and manage its elevated tax rate and borrowings.
Disclaimer: This article is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should perform their own due diligence and consult their own advisors before making investment decisions. The writer and publisher do not accept any liability for actions taken based on this article.
Versi Bahasa Malaysia
Keputusan Kewangan TSA Group Berhad Suku Pertama 2026: Perkara Utama dan Makluman Penting untuk Pelabur
- Prestasi Kewangan:
- Hasil suku pertama 2026 ialah RM61.5 juta, menurun 3.6% berbanding RM63.8 juta tahun lalu.
- Keuntungan Kasar menyusut 6.7% ke RM13.2 juta.
- Untung Sebelum Cukai (PBT) jatuh 34.9% ke RM3.7 juta, manakala Untung Selepas Cukai (PAT) susut 49.3% ke RM2.2 juta.
- Pendapatan sesaham (EPS) ialah 0.70 sen, menurun dari 1.39 sen.
- Dividen:
- Lembaga Pengarah mengisytiharkan dividen interim satu peringkat 1 sen sesaham, dibayar pada 22 Jun 2026.
- Kedudukan Kewangan:
- Aset Kumpulan meningkat sedikit ke RM262.3 juta.
- Aset bersih sesaham ialah RM0.59.
- Pinjaman meningkat ke RM51.7 juta, terutamanya akibat pinjaman mata wang asing yang lebih besar.
- Tunai dan setara tunai pada akhir suku ialah RM51.3 juta.
- Perkembangan Operasi dan Strategik:
- Kerja pembinaan kilang baru di Semenyih bermula pada Mac 2026, menyokong pengeluaran gegelung keluli tahan karat masa depan.
- Perniagaan kuari granit akan mula sumbang hasil pada separuh kedua 2026, dengan kos permulaan yang menjejaskan keuntungan suku ini.
- 87.6% hasil adalah domestik (Malaysia).
- Cukai:
- Kadar cukai efektif 42%, jauh lebih tinggi dari kadar statutori 24%, disebabkan kos permulaan kuari dan perbelanjaan tidak boleh ditolak cukai.
Kemas Kini Litigasi Material
- TSA Industries telah berjaya memulihkan RM3.26 juta dari akaun bank defendan dalam kes penyelewengan. Tiada kerugian lanjut diunjurkan dari kes ini.
- Dalam tuntutan pelayaran berkaitan kargo hilang di laut, tuntutan TSA dan balas tuntutan kapal telah ditolak. Penjual setuju menggantikan peralatan tanpa kos kepada TSA, meminimumkan risiko kewangan.
Maklumat Penting untuk Pelabur
- Penyusutan Untung: Penurunan mendadak PBT dan PAT boleh memberi tekanan ke bawah pada harga saham.
- Kadar Cukai Tinggi: Kadar cukai efektif 42% mungkin menjejaskan keuntungan bersih pada masa terdekat.
- Peningkatan Pinjaman: Peningkatan pinjaman untuk perluasan boleh membimbangkan pelabur berisiko rendah.
- Dividen Berterusan: Pembayaran dividen walaupun keuntungan menurun boleh menyokong harga saham dalam jangka masa pendek.
- Potensi Pertumbuhan: Perniagaan kuari dan kilang baharu boleh menjadi pemangkin nilai pada masa depan jika berjaya.
- Risiko Litigasi Dikawal: Penyelesaian kes lama dan pemulihan dana mengurangkan risiko kerugian tidak dijangka.
Penafian: Artikel ini untuk tujuan maklumat sahaja dan bukan nasihat pelaburan. Sila dapatkan nasihat profesional sebelum membuat sebarang keputusan pelaburan. Penulis dan penerbit tidak bertanggungjawab atas sebarang tindakan berdasarkan artikel ini.
