Hextar Technologies Solutions Navigates Challenging Waters in Q1FY26
Greetings, fellow investors! Today, we’re diving into the latest financial report from Hextar Technologies Solutions Berhad for its first quarter ended 30 June 2025 (Q1FY26). This quarter presents a mixed bag of significant challenges, particularly in revenue generation, alongside strategic moves aimed at positioning the company for future growth. The headline numbers reveal a widening loss and a notable decline in revenue, signaling a critical period for Hextar as it executes its strategic pivot.
Core Data Highlights: A Closer Look at Performance
Hextar’s Q1FY26 saw its revenue take a substantial hit, while its losses expanded. Let’s break down the key figures:
Q1FY26 (3 months ended 30 June 2025)
Revenue: RM26.643 million
Loss Before Tax: RM(6.080) million
Net Loss for the Period: RM(6.363) million
Basic Loss Per Share: (0.3) sen
Q1FY25 (3 months ended 30 June 2024)
Revenue: RM41.522 million
Loss Before Tax: RM(4.554) million
Net Loss for the Period: RM(5.021) million
Basic Loss Per Share: (0.2) sen
Revenue plummeted by approximately 35.8% to RM26.643 million compared to RM41.522 million in the corresponding quarter last year. This significant decline, coupled with increased operational expenses, led to a pre-tax loss of RM6.080 million, widening by 33.5% from RM4.554 million in Q1FY25.
Segmental Performance: A Mixed Bag
The report provides a detailed breakdown of how each business unit performed, revealing the specific drivers behind the overall results:
- Logistics: This segment remained generally consistent, with external revenue holding steady at RM812k (Q1FY26) compared to RM812k (Q1FY25). However, profit before tax saw a dip to RM189k from RM271k in the prior year, indicating some pressure on profitability despite stable top-line.
- Warehousing: External revenue here declined by 70% from RM40k to RM12k. Interestingly, profit before tax surged by 121.9% to RM253k from RM114k. This improvement was primarily attributed to a property being re-categorized as an asset held for sale, which meant no depreciation was charged during the quarter.
- Trading: This was the hardest hit segment, with external revenue plunging by approximately 79.1% from RM33.663 million to a mere RM7.041 million. Consequently, this segment reversed from a profit of RM7.294 million in Q1FY25 to a loss before tax of RM(588)k in Q1FY26. The company attributes this sharp downturn to a reduction in demand for building materials following the completion of substantial contracts from key customers in the previous financial quarter.
- Technology: While external revenue saw an increase from RM6k to RM24k, the segment’s loss before tax widened by 19.2% to RM(6.198) million from RM(5.198) million. This was primarily driven by elevated amortisation expenses on intangible assets and higher manpower costs, highlighting the significant investment phase this segment is undergoing.
Financial Health and Cash Flow
Looking at the broader financial picture, Hextar’s total assets decreased by 6.6% to RM139.892 million as of 30 June 2025, compared to RM149.847 million at 31 March 2025. Total equity also saw a decline of 7.6% to RM77.405 million. Net assets per share remained stable at RM0.04.
From a cash flow perspective, the Group recorded a net cash used in operating activities of RM(5.712) million for Q1FY26, a notable swing from the RM9.077 million generated in Q1FY25. This negative operational cash flow underscores the financial pressure from reduced revenue and increased expenses, making the proposed asset disposals critical for liquidity.
Risk and Prospect Analysis: Navigating the Future
Hextar Technologies Solutions Berhad faces a pivotal period, balancing current operational challenges with strategic initiatives for future growth. The company acknowledges the difficult quarter, attributing the overall pre-tax loss to the sharp decline in its trading segment and increased operational losses in the technology business.
Key Strategies and Outlook:
- Technology Monetisation: A core focus for FY2026 is to prioritise the monetisation strategy for both the MoneyX and MoneyX Biz platforms through omni-channels. This is aimed at optimising revenue for the technology segment, which currently incurs high costs.
- Logistics Efficiency: The company expects newly acquired trucks to commence operations after Q1FY26, anticipating enhanced operational efficiency within its logistics segment. This could help bolster profitability in a relatively stable business unit.
- Asset Disposals for Working Capital: Hextar is closely monitoring the progress of its proposed property disposals to ensure adequate working capital, particularly for ongoing investments in its technology segment. This highlights the importance of these non-core asset sales for funding strategic growth.
Challenges and Uncertainties:
- The significant drop in trading segment revenue is a major concern, indicating vulnerability to market demand shifts and contract cycles.
- The widening losses in the technology segment, driven by amortisation and manpower costs, show that the investment phase is intensive and requires careful management to ensure a return on investment.
- While two proposed property disposals (Port Klang and Pasir Gudang) are progressing, a third proposed disposal (Nilai land) was recently terminated. Although a new sale and purchase agreement (SPA) for identified land is expected, this introduces an element of uncertainty and potential delays in securing vital funds for working capital and technology investments.
Summary and Investment Recommendations
This quarter’s report from Hextar Technologies Solutions Berhad paints a picture of a company in a significant transitional phase. The sharp decline in revenue and widening losses, primarily driven by the trading segment’s downturn and ongoing high investment costs in technology, present clear challenges. However, it’s important to view these results within the context of the company’s stated strategy to pivot towards technology monetisation and enhance logistics efficiency. The planned asset disposals, despite some setbacks, remain crucial for providing the necessary working capital to fund these initiatives.
As a reminder, this analysis is for informational purposes only and does not constitute any buy or sell recommendations or investment advice. Investors should conduct their own thorough due diligence.
Key points for investors to consider from this report include:
- The magnitude and duration of the revenue slowdown in the trading segment.
- The pace and success of monetisation strategies for the MoneyX platforms in the technology segment.
- The successful completion of the remaining asset disposals and the terms of any new agreement for the Nilai land, as these are critical for funding.
- The ability of the logistics segment to improve efficiency and contribute more significantly to overall profitability.
Hextar’s Q1FY26 results highlight the execution risks involved in its strategic shift. The next few quarters will be crucial in demonstrating whether the company can successfully navigate these operational hurdles and translate its investments into sustainable growth. What are your thoughts on Hextar’s strategic pivot towards technology amidst these initial operational hurdles? Share your views in the comment section below!
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