The automotive sector is navigating a challenging road, and for Malaysian retail investors, understanding how companies like NEW HOONG FATT HOLDINGS BERHAD are performing is crucial. Today, we’re diving into their unaudited results for the first financial quarter ended 31 March 2025 (1Q 2025), a period that reveals both significant challenges and strategic resilience.
While the report highlights a noticeable decline in revenue and profit compared to the previous year, it also brings a positive note for shareholders: the declaration of a first interim dividend. This mixed bag of results underscores the dynamic environment the company operates in. Let’s break down the key figures and what they mean for the road ahead.
Navigating a Challenging Quarter: Revenue and Profit Decline
The first quarter of 2025 presented a tough operating environment for NEW HOONG FATT HOLDINGS BERHAD. The company reported a significant drop in its top and bottom lines, primarily attributed to lower sales volumes across both local and export markets, compounded by unfavorable foreign exchange movements.
1Q 2025
Revenue: RM63.93 million
Profit Before Tax: RM8.80 million
Net Profit: RM9.10 million
Basic Earnings Per Share: 5.50 sen
1Q 2024
Revenue: RM74.76 million
Profit Before Tax: RM16.12 million
Net Profit: RM15.12 million
Basic Earnings Per Share: 9.15 sen
Compared to the first quarter of 2024, revenue saw a decline of approximately 14.5%, from RM74.76 million to RM63.93 million. This revenue contraction directly impacted profitability, with Profit Before Tax (PBT) falling by a substantial 45.4% to RM8.80 million from RM16.12 million in the prior year’s corresponding quarter. The report specifically points out that unfavorable foreign exchange had a net adverse impact of RM2.57 million on the PBT, highlighting the sensitivity of the company’s earnings to currency fluctuations.
Net profit for the period followed suit, decreasing to RM9.10 million from RM15.12 million, representing a 39.8% reduction. Basic earnings per share (adjusted for a share split completed on 28 June 2024 for comparative purposes) also saw a significant drop to 5.50 sen from 9.15 sen.
Geographical Performance: A Broad-Based Slowdown
While the company operates primarily within a single segment (manufacturing and trading of automotive parts and accessories), a look at its geographical revenue breakdown reveals that the slowdown was widespread across its key markets:
| Geographical Segment | 1Q 2025 (RM’000) | 1Q 2024 (RM’000) | Change (RM’000) | % Change |
|---|---|---|---|---|
| Malaysia | 33,442 | 38,506 | (5,064) | -13.15% |
| ASEAN | 11,491 | 14,701 | (3,210) | -21.83% |
| Non-ASEAN | 19,000 | 21,557 | (2,557) | -11.86% |
| Total Segment Revenue | 63,933 | 74,764 | (10,831) | -14.49% |
All three major geographical segments experienced a decline in revenue, indicating a broad-based softness in demand for automotive parts and accessories. ASEAN markets saw the steepest percentage decline, highlighting regional economic challenges.
Financial Health: Stronger Balance Sheet Amidst Headwinds
Despite the challenging operational quarter, NEW HOONG FATT HOLDINGS BERHAD demonstrated a robust financial position. The company’s balance sheet remains healthy, with an increase in total equity and a notable reduction in total liabilities.
As at 31 March 2025
Total Assets: RM652.39 million
Total Equity: RM583.58 million
Total Liabilities: RM68.82 million
Net Assets Per Share: RM3.53
Cash & Cash Equivalents: RM133.94 million
As at 31 December 2024
Total Assets: RM655.41 million
Total Equity: RM574.72 million
Total Liabilities: RM80.69 million
Net Assets Per Share: RM3.48
Cash & Cash Equivalents: RM125.97 million
Total equity attributable to owners of the parent increased to RM583.58 million as at 31 March 2025, up from RM574.72 million at the end of the previous financial year. This increase, coupled with a decrease in total liabilities, led to a stronger net assets per share of RM3.53 (adjusted for share split for comparative purposes) compared to RM3.48 as at 31 March 2024.
Cash Flow Dynamics
From a cash flow perspective, the company generated RM13.19 million from operating activities for the quarter, a decrease from RM20.09 million in the same period last year, reflecting the lower profitability. However, the company’s cash and cash equivalents significantly increased to RM133.94 million at the end of the period, up from RM112.49 million in 1Q 2024, indicating effective cash management and a strong liquidity position.
The Road Ahead: Global and Domestic Headwinds
The management acknowledges the increasingly uncertain global economic outlook for 2025, with the International Monetary Fund (IMF) revising its growth forecast downwards. Key factors include persistent volatility in international trade, largely influenced by the U.S. tariff policy, and ongoing geopolitical tensions disrupting global supply chains. These external pressures directly impact sectors like automotive.
Domestically, Malaysia’s GDP growth forecast for 2025 has also been revised down by the IMF due to spillover effects from weakening global demand. The local automotive market continues to face headwinds from intense price competition and a reduction in order backlog momentum. Furthermore, the uncertainty surrounding new fiscal measures, such as the luxury tax and the RON95 fuel subsidy rationalization, could potentially dampen consumer sentiment. The influx of price-competitive Chinese products into regional markets is also adding pressure on local businesses.
In response to these challenges, the Board of Directors remains cautiously optimistic. Their strategy focuses on enhancing operational efficiencies, pursuing strategic product diversification, and executing targeted market expansion. These initiatives are designed to mitigate external risks and sustain performance in what is clearly a challenging business landscape.
Positive Note: Dividend Declaration
In a shareholder-friendly move, the Board of Directors has declared a first interim single tier dividend of 1.5 sen per ordinary share for the financial year ending 31 December 2025. This is a positive development, especially when compared to nil dividend declared in 1Q 2024. The dividend will be paid on 30 June 2025 to shareholders registered on 13 June 2025.
Summary and Investment Considerations
NEW HOONG FATT HOLDINGS BERHAD’s 1Q 2025 results reflect a period of operational headwinds, leading to a decline in revenue and profitability. The challenges stem from a combination of lower sales volumes and unfavorable foreign exchange impacts, exacerbated by a broader slowdown in both global and domestic automotive markets. However, the company maintains a strong balance sheet with healthy cash reserves, indicating financial resilience.
Looking ahead, the operating environment remains challenging due to global trade uncertainties, domestic policy shifts, and heightened competition. The management’s focus on operational efficiencies, product diversification, and market expansion will be crucial in navigating these complexities. The declaration of an interim dividend signals management’s confidence in the company’s long-term prospects and commitment to shareholder returns, despite the current quarter’s performance.
Key points to consider for the future include:
- The persistent global economic slowdown and trade volatility, which could continue to impact export markets.
- Domestic automotive market dynamics, including price competition and the potential impact of new fiscal policies on consumer spending.
- The company’s ability to effectively manage foreign exchange risks and leverage its strategic initiatives for sustainable growth.
This quarter’s report from NEW HOONG FATT HOLDINGS BERHAD paints a picture of a company facing strong external pressures but responding with strategic adjustments and a commitment to shareholder value through dividends. It’s a period of consolidation and adaptation.
What are your thoughts on NEW HOONG FATT HOLDINGS BERHAD’s latest performance? Do you believe their current strategies are sufficient to weather these challenges and return to stronger growth in the coming quarters? Share your insights in the comments below!
