Quarterly Performance Snapshot: A Challenging Period

The fourth quarter, ending 31 March 2025, saw XIN HWA facing a tougher operating environment. The Group recorded a slight decrease in revenue and an increase in its loss before tax compared to the immediate preceding quarter, primarily due to factors like heavy vehicle restrictions and festive holidays impacting cargo transportation services. However, when compared to the corresponding quarter last year, the company demonstrated a notable improvement in its bottom line by significantly reducing its losses.

While revenue for the quarter saw a minor decrease of about 4.7% compared to the same period last year, the significant improvement in the loss before tax, narrowing from RM9.70 million to RM7.66 million, is a positive sign. This reduction in loss was mainly attributed to lower impairment of doubtful debt recognized for the year, indicating better asset quality management.

Full Financial Year Performance: A Story of Recovery

Looking at the cumulative results for the full financial year ended 31 March 2025, XIN HWA has demonstrated a commendable turnaround. The company not only grew its revenue but also substantially reduced its overall losses, showcasing its ability to navigate a challenging period and improve operational efficiency.

The full-year revenue surged by 18.1%, from RM120.54 million to RM142.38 million. More impressively, the loss before tax was slashed by over 53%, highlighting significant improvements in cost management and operational efficiency over the past year. This indicates that while the fourth quarter had its specific challenges, the overall trend for the year has been positive towards profitability.

Diving Deeper: Segmental and Geographical Insights

XIN HWA’s business is primarily driven by its land transport, warehousing, and other services segment, which contributed approximately 73.8% of the Group’s total revenue for the current quarter. The manufacturing segment, while smaller, remains a significant contributor.

Business Segment Performance (Full Year vs. Full Year Last Year)

• Land Transport, Warehousing & Other Services: Revenue grew from RM101.70 million to RM120.71 million, an increase of 18.7%. The segment also saw a significant reduction in its loss before tax, from RM22.48 million to RM10.76 million.
• Manufacturing: Revenue increased from RM18.83 million to RM21.68 million, a gain of 15.1%. However, profit before tax for this segment saw a decrease from RM1.98 million to RM1.23 million.

Geographical Revenue Breakdown (Full Year vs. Full Year Last Year)

• Malaysia: Revenue grew robustly from RM111.39 million to RM126.41 million, an increase of 13.5%.
• Singapore: Revenue saw a decline from RM6.62 million to RM5.53 million, a decrease of 16.5%.
• Indonesia: This market showed exceptional growth, with revenue skyrocketing from RM2.53 million to RM10.44 million, a massive increase of 312.6%! This highlights the success of the Group’s expansion efforts in Indonesia.

The stellar growth in the Indonesian market is particularly noteworthy, signaling successful regional expansion efforts that are now contributing significantly to the Group’s top line.

Financial Health Check: Balance Sheet and Cash Flow

As of 31 March 2025, XIN HWA’s total assets stood at RM416.03 million, a slight decrease from RM436.67 million last year. Total liabilities also saw a reduction, from RM223.84 million to RM214.78 million, indicating some deleveraging. Total borrowings decreased from RM119.27 million to RM106.57 million, which is a healthy sign of debt management.

From a cash flow perspective, the Group generated RM22.14 million from operating activities for the full year, a slight increase from RM21.88 million last year. While cash used in investing activities was RM1.87 million (a reduction from RM11.24 million last year), financing activities resulted in a net outflow of RM21.86 million, primarily due to loan repayments and a dividend paid to minority shareholders of a subsidiary. This led to a net decrease in cash and cash equivalents of RM1.59 million for the period, a much smaller decrease compared to RM8.77 million in the previous year.

Navigating Headwinds and Charting Future Growth

The report acknowledges ongoing challenges in the operating business environment. A significant event impacting the fourth quarter was the temporary suspension of a major subsidiary’s (Xin Hwa Trading & Transport Sdn. Bhd. – XHTT) Goods Vehicle Operator License. This suspension, effective from November 2024 to January 2025, led to increased costs as the company had to subcontract services to maintain customer contracts, impacting gross profit margins.

Furthermore, domestic challenges such as extended restrictions on heavy vehicles in Klang Valley and major festive holidays during the quarter (Chinese New Year and Eid al-Fitr) also contributed to the decline in cargo transportation services revenue compared to the immediate preceding quarter.

Despite these hurdles, XIN HWA has been proactive. The company immediately addressed the license suspension issue, successfully appealed, and had the suspension lifted earlier than expected. This swift action minimized the adverse impact on operations.

Looking ahead, XIN HWA is committed to its strategic expansion plans to drive future growth:

• Expanding its fleet of vehicles to enhance capacity.
• Further expansion into the high-growth Indonesian market.
• Enhancing existing warehousing facilities to improve service offerings.
• Expanding its external haulage division in Penang and Kuantan.
• Increasing manufacturing capacity to support diversified revenue streams.

These initiatives demonstrate the management’s commitment to strengthening its core businesses and exploring new avenues for growth, positioning the company for a more resilient future.