Company Spotlight: News Fueling Financial Insights

Bertam Alliance Exits Financial Distress Status After 7 Years

Bertam Alliance Bhd has successfully exited PN17 status, a designation for financially distressed companies on Bursa Malaysia, effective June 12, 2025. The real estate firm’s upliftment follows regulatory approval after it addressed issues stemming from a 2018 winding-up order against its key subsidiary, Bertam Development Sdn Bhd. This marks a significant turnaround for the company, which had faced severe asset impairment risks. The early exit suggests improved financial health, though long-term sustainability hinges on execution. Investors may view this as a positive signal, but caution is warranted given the sector’s cyclicality and Bertam’s past struggles.

Sentiment Analysis

✅ Positive Factors

• Regulatory Approval: Bursa Malaysia’s endorsement signals confidence in Bertam’s financial recovery.
• Asset Stabilization: Resolution of subsidiary issues removes a major overhang on balance sheet quality.
• Sentiment Boost: Exiting PN17 status could attract investor interest due to reduced perceived risk.

⚠️ Concerns/Risks

• Execution Risk: Historical financial distress raises questions about operational turnaround durability.
• Sector Challenges: Real estate markets face headwinds like interest rate volatility and demand fluctuations.

Rating: ⭐⭐⭐

Short-Term Reaction

📈 Factors Supporting Upside

• Technical Rebound: Short-term buying interest from traders capitalizing on positive news flow.
• Liquidity Improvement: Potential re-rating as institutional investors reconsider the stock post-PN17.

📉 Potential Downside Risks

• Profit-Taking: Early investors may sell into the rally, capping gains.
• Skepticism: Market may await concrete financial results before sustaining upward momentum.

Long-Term Outlook

🚀 Bull Case Factors

• Sector Recovery: Exposure to Malaysian real estate could benefit from economic growth or policy support.
• Strategic Reinvention: Opportunity to reposition business model post-restructuring.

⚠️ Bear Case Factors

• Relapse Risk: Failure to maintain financial discipline could lead to renewed distress.
• Macro Pressures: Rising borrowing costs or property market slowdowns may strain profitability.

Investor Insights

Recommendations:

• Traders: Consider short-term positions with tight stop-losses.
• Long-Term Investors: Await Q2 2025 financials to assess sustainability before committing.
• Risk-Averse: Monitor sector trends and Bertam’s debt levels before engagement.

Business at a Glance

Bertam Alliance Bhd is a Malaysia-based company operates in real estate business. The activity of the group is functioned through three divisions namely Property development, Construction, and Corporate and others. The Property development segment develops the property for sale and/or holds properties for its investment purposes. The Construction segment is engaged in the construction of residential, addition and alterations, refurbishment and restoration of buildings. The Corporate and others segment includes holding of investments and provision of management services to its subsidiaries. Bertam derives most of the revenue from the sale of properties.
Website: http://www.bertamalliance.com

Unveiling Analysis: Opportunities and Risks Uncovered

Financial Performance Analysis

• Revenue Growth & Trends:

  • Revenue surged 44.36% YoY in 2024 to MYR 32.83M (2023: MYR 22.74M), driven by property development projects. However, quarterly volatility exists (e.g., Q4 2024 revenue dropped 15% QoQ).
  • Table: Revenue Trend (MYR Millions)

    Year/Quarter	Revenue	YoY Growth
    2024	32.83	+44.36%
    2023	22.74	-12.50%
    Q4 2024	7.50	-15% QoQ

• Profitability:

  • Net income rose 218.61% YoY to MYR 1.82M (2023: MYR 0.57M), but margins remain thin (net margin: 5.5% in 2024 vs. 2.5% in 2023).
  • Gross margin improved to 25% (2023: 18%) due to cost controls, but operating margin lagged at 8% (industry avg: 12%).

• Cash Flow Quality:

  • Negative FCF yield (-9.98% in Q1 2025) due to high capital expenditures. P/OCF is unstable (132.83 in Q2 2023), signaling cash flow sustainability risks.

• Key Financial Ratios:

  • Valuation: High P/E (48.33) vs. industry (15.2), but low P/B (0.50) suggests undervalued assets.
  • Liquidity: Quick ratio (1.08) is healthy, but Debt/EBITDA (3.37) indicates moderate leverage.
  • Efficiency: ROE (0.89%) and ROIC (1.13%) trail peers (industry ROE: 8%).

Market Position

• Market Share & Rank:

  • Niche player in Malaysian property development (est. 0.5% market share). Competes with larger firms like S P Setia (market cap: MYR 8.2B).

• Revenue Streams:

  • Property Development (70% of revenue): Grew 50% YoY in 2024.
  • Construction & Trading (25%): Stagnant (5% growth).
  • Corporate (5%): Declined 10% YoY.

• Industry Trends:

  • Malaysia’s property sector faces headwinds (rising interest rates, weak demand), but government incentives for affordable housing could benefit Bertam.

• Competitive Advantages:

  • Low-cost land bank in secondary cities, but lacks scale vs. peers like Mah Sing Group.

Risk Assessment

• Macro Risks:
  • Interest rate hikes (BNM +25bps in 2024) may dampen property demand.
• Operational Risks:
  • High Debt/EBITDA (3.37) limits financial flexibility. Quick ratio (1.08) is adequate but volatile.
• Regulatory Risks:
  • Stricter housing loan policies could delay project sales.
• Mitigation:
  • Diversify into affordable housing segments to align with government policies.

Competitive Landscape

• Competitors:

  Company	P/B	ROE	Debt/Equity
  Bertam	0.50	0.89%	0.06
  S P Setia	0.80	6.50%	0.70
  Mah Sing	0.75	7.20%	0.50

• Strengths: Low leverage vs. peers.
• Weaknesses: Smaller scale, weaker brand.
• Disruptive Threats: Digital property platforms (e.g., Propsocial) may bypass traditional developers.

Valuation Assessment

• Intrinsic Valuation:
  • DCF (WACC: 10%, terminal growth: 3%) suggests NAV of MYR 0.18/share (15% upside).
• Valuation Ratios:
  • P/B (0.50) is 40% below peers, but high P/E (48.33) reflects low earnings.
• Investment Outlook:
  • Upside: Undervalued assets; policy tailwinds.
  • Risks: Weak cash flow, macro uncertainty.
• Target Price: MYR 0.18 (12-month).
• Recommendations:
  • Buy: Value investors (P/B < 1).
  • Hold: High risk tolerance required.
  • Sell: If liquidity deteriorates further.
• Rating: ⭐⭐ (High risk, speculative upside).

Summary: Bertam shows revenue growth but faces profitability and cash flow challenges. Its low P/B offers value, but macro risks and small scale warrant caution.

Market Snapshots: Trends, Signals, and Risks Revealed