Core instructions: You are a senior blogger, and your task is to directly output the content based on the uploaded company quarterly report
HEXTAR RETAIL BERHAD: Navigating Growth and Challenges in Q1 FY2025
Greetings, fellow investors and market watchers! Today, we’re diving deep into the latest financial performance of Hextar Retail Berhad (HEXRTL) for their first quarter ended 31 March 2025. This report offers a fascinating glimpse into the company’s strategic shifts and operational landscape, highlighting both impressive revenue growth and the challenges of an expanding business.
While HEXRTL achieved a notable increase in revenue, the quarter saw a shift to a loss before tax, primarily due to strategic expansions and market dynamics. Let’s break down the numbers and understand what’s shaping the future of this evolving Malaysian retail player.
Financial Performance: A Closer Look at the Numbers
The first quarter of FY2025 presented a mixed bag for Hextar Retail. While top-line growth was robust, profitability faced headwinds. Here’s how the key figures stack up against the corresponding period last year:
Q1 FY2025
Revenue: RM15.4 million
(Loss) Before Tax: RM(0.9) million
(Loss) After Tax: RM(0.8) million
(Loss) Attributable to Owners: RM(0.6) million
Basic (Loss) Per Share: (0.11) sen
Q1 FY2024
Revenue: RM11.4 million
Profit Before Tax: RM0.3 million
Profit After Tax: RM0.1 million
Profit Attributable to Owners: RM0.3 million
Basic Earnings Per Share: 0.07 sen
As you can see, revenue surged by an impressive RM4.0 million, or 35.1%, reaching RM15.4 million. This growth was largely propelled by a significant contribution from the retail segment. However, the Group recorded a loss before tax of RM0.9 million, a stark contrast to the RM0.3 million profit in the corresponding quarter of the previous year. This decline in profitability is mainly attributed to higher operating expenses incurred from the expansion of retail operations, coupled with lower revenue from the Wooden Picture Frame Mouldings (WPFM) segment due to a lower average selling price.
Comparing the current quarter to the immediate preceding quarter (Q4 FY2024) also sheds light on recent trends:
Q1 FY2025
Revenue: RM15.4 million
(Loss) Before Tax: RM(0.9) million
(Loss) After Tax: RM(0.8) million
(Loss) Attributable to Owners: RM(0.6) million
Q4 FY2024
Revenue: RM18.0 million
Profit Before Tax: RM3.6 million
Profit After Tax: RM2.5 million
Profit Attributable to Owners: RM2.7 million
Against the immediate preceding quarter, revenue decreased by 14.4% from RM18.0 million, largely due to lower export volume in WPFM and weaker retail sales impacted by the March fasting month. The shift from a RM3.6 million profit before tax in Q4 FY2024 to a RM0.9 million loss in Q1 FY2025 was further exacerbated by a one-off unrealised foreign exchange gain recorded in the previous quarter.
Business Segment Performance
Hextar Retail operates primarily in two key segments: Wooden Picture Frame Mouldings (WPFM) and Retail. Their performance this quarter highlights the ongoing strategic shift:
| Segment | Revenue (RM’000) | Segment Profit/(Loss) (RM’000) |
|---|---|---|
| Wooden Picture Frame Mouldings | 9,661 | 130 |
| Retail | 5,776 | (1,066) |
| Other Non-reportable Segments | – | 170 |
| Total | 15,437 | (766) |
The retail segment, despite contributing significantly to revenue growth, recorded a loss, reflecting the investment phase of its expansion. The WPFM segment, while profitable, saw lower revenue due to pricing pressures.
Financial Health and Cash Flow
As of 31 March 2025, Hextar Retail’s total assets stood at RM236.99 million, a slight increase from RM236.19 million at the end of 2024. The company maintains a healthy cash and cash equivalents position of RM53.23 million. Importantly, the Group has no bank borrowings, indicating a strong balance sheet from a debt perspective.
From an operational cash flow perspective, the Group generated RM2.33 million in net cash from operating activities, which is a positive sign, although it was lower than the RM0.66 million generated in the corresponding quarter last year. This cash generation is crucial for funding ongoing operations and strategic investments.
Risks and Prospects: Navigating the Future
Hextar Retail acknowledges the challenging operating environment, particularly for its WPFM segment. Global trade policies, escalating trade tensions, and geopolitical conflicts continue to create uncertainties. To counter these, the Group is focused on strategic cost-saving measures, enhancing production efficiency, and exploring new market opportunities.
On the retail front, the outlook is more optimistic. Malaysia’s economy grew by 4.4% in Q1 2025, buoyed by strong domestic demand and positive labor market conditions. This provides a supportive backdrop for household spending. Hextar Retail is actively expanding its presence, adapting to evolving consumer behaviors, and incorporating tech-enabled retail solutions like smarter inventory systems and data-driven insights to enhance efficiency and customer experience.
Overall, the Group remains cautiously optimistic for 2025, committed to proactively pursuing opportunities and addressing challenges to deliver sustainable value.
Corporate Developments and Dividends
The quarter also saw significant corporate activities. The proposed private placement of up to 30.0% of new ordinary shares was completed, bolstering the company’s capital. The proposed acquisition of Redina Malaysia Sdn Bhd was terminated, with the company entitled to the repurchase of Tranche 1 shares. Furthermore, the proposed diversification into apparel and food and beverages retail businesses was approved, aligning with the company’s strategic growth areas. Notably, the company’s name officially changed from “Classic Scenic Berhad” to “Hextar Retail Berhad” in February 2024, reflecting its new strategic direction.
For the current quarter, the Board has not proposed or declared any dividends.
Summary and
Hextar Retail Berhad’s Q1 FY2025 report paints a picture of a company in transition. The strategic pivot towards retail is evident in the segment’s revenue contribution, even as it incurs initial losses due to expansion efforts. The traditional WPFM business faces external headwinds, prompting internal efficiency drives. While the shift to a net loss is a concern, it appears to be a consequence of deliberate strategic investments and market conditions rather than a fundamental operational flaw.
The company’s robust cash position and lack of bank borrowings provide a solid foundation for its expansion plans. The focus on integrating technology into retail operations and exploring new markets for WPFM demonstrates a forward-thinking approach to navigate competitive landscapes.
Key points from this report include:
- Strong revenue growth driven by the retail segment, indicating successful market penetration in new ventures.
- A temporary dip into loss before tax, primarily due to increased operating expenses from retail expansion and challenges in the WPFM segment.
- Strategic corporate actions, including a completed private placement and diversification into new retail areas, are reshaping the company’s profile.
- A healthy cash position and absence of bank borrowings provide financial flexibility.
- Ongoing efforts to enhance efficiency and explore new markets to mitigate global trade uncertainties.
Looking ahead, the success of Hextar Retail will hinge on its ability to effectively manage the integration and profitability of its expanding retail operations while maintaining resilience in its traditional business. The cautious optimism expressed by the management seems appropriate given the current environment.
What are your thoughts on Hextar Retail’s performance this quarter? Do you believe their strategic shift into retail will yield significant returns in the long run? Share your insights in the comments below!
