HE Group’s Q2 2025 Report: Navigating a Tough Quarter with Stronger Margins
HE Group Berhad, a key player in Malaysia’s electrical engineering landscape, has just released its financial results for the second quarter ended June 30, 2025. The report paints a mixed but intriguing picture: while revenue saw a significant dip due to the completion of major projects, the company demonstrated impressive resilience by improving its profit margins. For investors tracking the company’s journey, this quarter offers a deep dive into its operational efficiency and strategic positioning for future growth.
A key takeaway from this quarter is the company’s ability to secure higher-margin projects, a strategic move that has cushioned the impact of lower revenue. Let’s break down the numbers to understand what’s really going on.
Core Financial Highlights: A Deeper Look
This quarter’s performance reflects a transitional phase for HE Group, as several projects concluded. While this led to a year-on-year decline in top-line figures, the underlying profitability metrics tell a story of strategic project selection.
Q2 2025 (Current Quarter)
Revenue: RM 32.05 million
Profit Before Tax (PBT): RM 4.25 million
Profit After Tax (PAT): RM 3.16 million
Earnings Per Share (EPS): 0.72 sen
Q2 2024 (Comparative Quarter)
Revenue: RM 48.90 million
Profit Before Tax (PBT): RM 5.56 million
Profit After Tax (PAT): RM 4.21 million
Earnings Per Share (EPS): 0.96 sen
The Group’s revenue for Q2 2025 decreased by 34.46% compared to the same quarter last year, a direct result of project completions. Consequently, Profit Before Tax (PBT) and Profit After Tax (PAT) also saw declines of 23.56% and 24.70% respectively. However, the most crucial metric this quarter is the Gross Profit (GP) margin, which rose to an impressive 20.2% from 16.2% in Q2 2024. This indicates that the current portfolio of projects is more profitable, showcasing the management’s focus on quality over quantity.
Shifting Revenue Streams
The Group’s revenue composition has shifted this quarter, reflecting the dynamic nature of its project pipeline. While the Power Distribution System segment saw a decrease, contributions from Other Building Systems and Works grew substantially.
| Business Segment | Revenue Contribution (Q2 2025) | Revenue Contribution (Q2 2024) |
|---|---|---|
| Other building systems and works | 39.76% | 12.17% |
| Power distribution system | 34.56% | 65.17% |
| Electrical equipment hook-up and retrofitting | 25.65% | 21.49% |
| Trading | 0.03% | 1.17% |
Risk and Prospect Analysis: Charting the Path Forward
HE Group is operating in an environment ripe with opportunity, though not without its challenges. The company’s future hinges on its ability to capitalize on national growth trends while navigating global economic uncertainties.
Opportunities on the Horizon
The outlook for HE Group is anchored by several powerful tailwinds. Malaysia’s national agenda, including the 13th Malaysia Plan and the National Semiconductor Strategy, is set to fuel significant investment in the semiconductor and data centre sectors. The report highlights that Malaysia’s data centre market is projected to be the fastest-growing in the Asia Pacific by 2030, creating sustained demand for HE Group’s specialized electrical engineering solutions.
Furthermore, the nation’s push towards renewable energy, particularly through initiatives like the Battery Energy Storage Systems (BESS) bidding exercise, presents a natural and exciting growth avenue for the company, aligning perfectly with its expertise in power distribution.
Adding to the positive sentiment is the company’s proposed transfer from the ACE Market to the Main Market of Bursa Malaysia, a move that signals corporate maturity and is likely to enhance its visibility and appeal to a wider range of investors.
Navigating Potential Challenges
Despite the promising domestic landscape, the company remains “cautiously optimistic,” acknowledging risks from global geopolitical tensions and protectionist policies. These macroeconomic factors could influence investment flows and project timelines. The Group’s strategy is to maintain a disciplined approach, focusing on projects with sustainable margins to safeguard long-term shareholder value.
Summary and Outlook
HE Group Berhad’s second-quarter results for 2025 reveal a company in a strategic transition. The decline in revenue, driven by the natural cycle of project completions, was met with a commendable improvement in profitability margins. This demonstrates strong operational management and a focus on high-value projects. The company’s balance sheet remains healthy, with a solid cash position and manageable borrowings.
Looking ahead, the Board expects financial performance to remain stable and satisfactory. The company is well-positioned to benefit from Malaysia’s strategic investments in high-growth sectors like technology and green energy. While external risks persist, HE Group’s disciplined strategy and technical expertise provide a solid foundation for capturing future opportunities.
- Project Pipeline Dependency: The quarterly results underscore the Group’s reliance on the timing of project completions. A key focus for investors will be the company’s ability to consistently secure new, high-margin projects to ensure revenue stability.
- Macroeconomic Headwinds: Global economic volatility remains a significant risk. Any slowdown in foreign or domestic investment could impact the pipeline of large-scale industrial and infrastructure projects in Malaysia.
- Competition and Margin Pressure: While margins improved this quarter, the engineering sector is competitive. Sustaining these higher margins will depend on the company’s ability to maintain its technical edge and cost discipline.
- Execution in New Sectors: Venturing into new areas like BESS offers immense potential but also comes with execution risks. The company’s ability to adapt and deliver in these emerging markets will be critical for long-term growth.
Final Thoughts
From a professional standpoint, HE Group’s ability to enhance profitability margins amidst a revenue slowdown is a testament to its operational efficiency and strategic project selection. The strategic alignment with high-growth sectors like data centres and renewable energy is promising, but investors should monitor how effectively the company converts these macro opportunities into tangible revenue streams in the upcoming quarters.
What are your thoughts on HE Group’s performance this quarter? Do you believe its focus on high-margin projects is the right strategy for long-term growth? Share your insights in the comments below!
