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Malaysia-listed RGB International Bhd, a key player in the gaming equipment supply sector, has reported a 37% year-on-year decline in net profit for the first quarter of 2025, despite achieving record-breaking revenue of RM1.26 billion ($268 million) in 2024. The company’s Q1 net profit settled at RM18.7 million ($4 million), down from RM29.6 million ($6.3 million) in the same period last year, signaling challenges in sustaining growth amid shifting regional market dynamics.
RGB’s Financial Performance
RGB’s Q1 revenue dipped to RM210 million ($44.7 million), a 15% decrease compared to Q1 2024’s RM247 million ($52.6 million). This contraction follows a stellar 2024, where the company capitalized on post-pandemic demand across Southeast Asia, supplying slot machines and casino management systems to markets like Cambodia, Vietnam, and the Philippines.
The profit slump is attributed to higher operating costs (up 22% YoY) and delayed orders from several integrated resort projects in Vietnam and Thailand. RGB’s gross profit margin eroded to 41%, down from 48% in Q1 2024, as logistics expenses and component shortages inflated procurement costs.
Regional Market Pressures Intensify
The company faces headwinds in key territories. For example, Vietnam’s proposed casino tax hike has stalled $92 million in pending orders. Philippines’ PAGCOR reported a 12% decline in new machine installations amid liquidity constraints. And lastly, Cambodia’s NagaCorp scaled back expansion plans, reducing RGB’s projected supply contracts by 18%.
These challenges compound existing issues in Malaysia’s domestic market, where RGB’s sales to local casinos fell 9% due to prolonged licensing delays for new gaming venues.
Diversification and Cost Controls
RGB is pivoting to offset losses, announcing a RM50 million ($10.6 million) investment in AI-driven gaming analytics platforms and a partnership with South Korea’s LG CNS to develop integrated resort management systems. The company has also slashed its dividend payout ratio to 25% (down from 40% in 2024) to preserve liquidity.
The company maintains its full-year revenue guidance of RM1.1 billion ($234 million), banking on deferred orders from Vietnam’s Hoiana Resort and Malaysia’s Genting Highlands.
Investor Sentiment and Market Reaction
RGB’s shares closed 6.3% lower on Bursa Malaysia following the earnings release, reflecting investor concerns about margin recovery. Analysts have mixed outlooks:
- Maybank IB maintains a “Buy” rating, citing RGB’s RM380 million ($81 million) backlog.
- CIMB Research downgraded to “Hold,” flagging 14% downside risk from supply chain disruptions.
The stock’s forward P/E ratio of 8.7x trails the industry average of 11.4x, suggesting muted confidence in near-term recovery.
Regulatory Clouds Loom
Malaysia’s proposed Goods and Services Tax (GST) increase on gaming equipment (from 6% to 8%) could further squeeze RGB’s margins if implemented in Q3 2025. The company has allocated RM12 million ($2.5 million) for tax contingency planning but warns the levy may force price hikes of 5–7% for ASEAN clients.
Balancing Act Required
RGB’s ability to navigate these challenges hinges on executing its tech diversification strategy while managing cost inflation. With Southeast Asia’s gaming equipment market projected to grow 6.8% annually through 2030, the company remains well-positioned, provided it can adapt to the sector’s evolving demands.
Stakeholders await Q2 results to gauge whether 2024’s record performance was an anomaly or a benchmark for future resilience.
Source: Inside Asian Gaming (IAG)
