NHF Sustains Profitability Amidst Challenging Q1 2025: A Deep Dive into the Latest Report
Greetings, fellow investors and market watchers! Today, we’re taking a closer look at the latest financial performance of New Hoong Fatt Holdings Berhad (NHF), a prominent Malaysian manufacturer and distributor of automotive replacement parts. The company recently released its unaudited financial results for the first quarter ended 31 March 2025 (1Q 2025), and it paints a picture of a company navigating an increasingly challenging landscape while maintaining profitability and rewarding shareholders with a dividend.
Despite headwinds from intensified competition and unfavourable foreign exchange movements, NHF has managed to stay in the black. This report offers valuable insights into the resilience of a key player in the automotive aftermarket. Let’s break down the numbers and strategic outlook presented in their latest announcement.
Q1 2025 Performance: Navigating Headwinds
NHF’s first quarter results reflect a tougher operating environment. While the Group remained profitable, both revenue and profit before tax saw a decline compared to the same period last year. Let’s examine the key figures:
1Q 2025 Highlights
Revenue: RM63.93 million
Profit Before Tax (PBT): RM8.80 million
Net Profit: RM9.10 million
Earnings per Share: 5.50 sen
Compared to 1Q 2024
Revenue: RM74.76 million
Profit Before Tax (PBT): RM16.12 million
Net Profit: RM15.12 million
Earnings per Share: 9.15 sen (adjusted for share split)
The Group’s revenue for 1Q 2025 stood at RM63.93 million, a decrease of RM10.83 million compared to RM74.76 million in 1Q 2024. This reduction was primarily attributed to lower sales volumes in both local and export markets. Concurrently, Profit Before Tax (PBT) saw a significant drop of RM7.32 million, from RM16.12 million in 1Q 2024 to RM8.80 million in 1Q 2025. This decline was not only due to the lower revenue but also impacted by an unfavourable foreign exchange movement, which had a net adverse impact of RM2.57 million.
As a direct consequence, Net Profit decreased by RM6.02 million, settling at RM9.10 million for 1Q 2025, down from RM15.12 million in the corresponding period last year. Earnings per share for the quarter were 5.50 sen, compared to 9.15 sen per share in the same period last year (adjusted for a share split completed in June 2024, which subdivided every one existing ordinary share into two).
NHF’s Managing Director, Mr. Chin Jit Sin, acknowledged the “increasingly challenging” business environment, highlighting intensified competitive dynamics and pronounced price competition from low-cost Chinese brands. However, he emphasized the Group’s ability to remain profitable despite sluggish volume recovery, attributing this to their market diversification strategy and decisive adaptability.
Financial Health and Shareholder Returns
Despite the dip in profitability, NHF’s Board of Directors demonstrated confidence in the Group’s financial standing by declaring a first interim single tier dividend of 1.5 sen per ordinary share for the financial period ended 31 March 2025. This dividend is scheduled to be paid on 30 June 2025 to shareholders registered on 13 June 2025. This move reflects the company’s commitment to returning value to its shareholders even in a challenging quarter.
Outlook: Navigating Global and Domestic Headwinds
The global economic outlook for 2025 remains uncertain. The International Monetary Fund (IMF) has revised its global growth forecast downward to 2.8%, citing persistent volatility in international trade, largely influenced by expansive U.S. tariff policies. While a temporary suspension of further tariff hikes offers some relief, ongoing policy unpredictability and geopolitical tensions continue to disrupt global supply chains, affecting various sectors, including automotive.
Domestically, Malaysia’s 2025 GDP growth has also been revised down to 4.1% by the IMF, due to spillover effects from weakening global demand and unresolved trade frictions. The local automotive market faces its own challenges, including intense price competition and reduced order backlog momentum. Furthermore, uncertainties surrounding the implementation of fiscal measures like the luxury tax and RON95 fuel subsidy rationalisation could dampen consumer sentiment. Businesses are also bracing for increased pressure from the influx of price-competitive Chinese products in regional markets.
In response to these developments, the Board of Directors remains cautiously optimistic. Mr. Chin reiterated NHF’s commitment to executing strategic initiatives, enhancing operational efficiencies, and strengthening market positioning to ensure long-term resilience and sustainable growth. Barring unforeseen circumstances, the Group anticipates a satisfactory financial performance for the full financial year ending 2025.
Summary and
New Hoong Fatt Holdings Berhad’s 1Q 2025 results highlight a quarter of sustained profitability amidst a challenging operational landscape. While revenue and profit figures saw a decline compared to the previous year, primarily due to lower sales and adverse foreign exchange movements, the company’s ability to remain profitable is a testament to its market diversification and adaptive strategies. The declaration of an interim dividend further signals the board’s confidence in the company’s underlying strength and commitment to shareholder returns.
Looking ahead, the global and domestic economic environments present significant hurdles, including trade volatility, intensified competition from lower-cost alternatives, and potential shifts in local consumer sentiment due to fiscal policies. However, NHF’s management is proactively addressing these challenges by focusing on operational efficiencies and strengthening its market presence.
Key points from the report include:
- Sustained Profitability: Despite revenue and profit decline, the Group managed to stay profitable in a tough quarter.
- Challenging Market Dynamics: Intense price competition, especially from Chinese brands, and sluggish volume recovery are key pressures.
- Foreign Exchange Impact: Unfavourable forex movements significantly impacted profitability.
- Shareholder Returns: A 1.5 sen interim dividend declared, reflecting confidence.
- Cautiously Optimistic Outlook: Management is committed to strategic initiatives to ensure long-term resilience, expecting satisfactory performance for FY2025.
It’s clear that NHF is operating in a complex environment, but their strategic focus on adaptability and efficiency will be crucial in navigating these headwinds.
As retail investors, it’s essential to consider how these macro and micro factors might influence NHF’s trajectory. Do you think NHF’s market diversification strategy and focus on operational efficiencies will be enough to counter the persistent competitive pressures and economic uncertainties in the coming quarters? Share your thoughts and insights in the comments below!
