Hey there, fellow Malaysian retail investors! It’s that time again when we dive deep into the latest financial disclosures of companies on Bursa Malaysia. Today, we’re putting the spotlight on **Country Heights Holdings Berhad (CHHB)**, a well-known name with diverse interests spanning property, hospitality, healthcare, and exhibition. They’ve just released their financial results for the first quarter ended 31 March 2024, and it’s a report that paints a picture of both growth in revenue and widening losses.
While CHHB saw an encouraging increase in its top line, the bottom line tells a more challenging story for the quarter. However, a closer look reveals the underlying dynamics at play within each of their business segments and the strategic steps they are taking to navigate the current economic landscape. Let’s break down the numbers and what they mean for the company’s path forward.
Financial Performance Overview: Navigating a Mixed Landscape
CHHB’s first quarter of 2024 saw a commendable increase in revenue, signaling positive traction in certain segments. However, this was overshadowed by a significant widening of losses. Here’s a snapshot of the core financial figures:
Q1 2024
Revenue: RM12.22 million
Loss Before Tax: (RM5.02 million)
Loss After Tax: (RM5.43 million)
Loss Attributable to Equity Holders: (RM4.61 million)
Basic Loss Per Share: (1.55 sen)
Q1 2023
Revenue: RM11.26 million
Loss Before Tax: (RM2.85 million)
Loss After Tax: (RM3.06 million)
Loss Attributable to Equity Holders: (RM2.96 million)
Basic Loss Per Share: (1.00 sen)
Revenue for the current quarter increased by approximately 9% to RM12.22 million compared to RM11.26 million in the preceding year corresponding quarter. This growth was primarily driven by the sales of completed properties from their Belezza Phase 3 and Pangsa Rakyat Pajam developments.
However, the Group’s loss before tax widened significantly by 76% to RM5.02 million from RM2.85 million in the same period last year. This was mainly attributed to a forfeited deposit recorded in the preceding year corresponding quarter, which boosted profitability then, making the current quarter’s figures appear less favorable by comparison.
Similarly, the loss after tax widened by 78% to RM5.43 million, and the loss attributable to equity holders increased by 56% to RM4.61 million. Consequently, basic loss per share also saw an increase, reflecting the challenging quarter for profitability.
Segmental Breakdown: A Closer Look at Business Units
Understanding CHHB’s performance requires a dive into its various business segments:
Healthcare Division
The Healthcare Division recorded revenue of RM3.49 million in the current quarter, a decrease from RM4.94 million in the preceding year corresponding quarter. This decline was primarily due to lower revenue generated from health screening memberships and wellness businesses. As a result, the segment loss widened to RM0.62 million from RM0.03 million in the comparative period.
Resorts & Hospitality Division
This division showed an encouraging revenue increase to RM2.98 million in the current quarter, up from RM2.35 million in the preceding year corresponding quarter. This improvement was largely driven by various festival events and promotions held by Mines Beach Resort. Despite the revenue growth, the segment loss significantly widened to RM2.48 million from RM0.62 million. This was mainly due to higher maintenance costs associated with certain investment properties.
Exhibition & Convention Division
The Exhibition & Convention Division saw a slight increase in revenue to RM0.95 million from RM0.88 million in the preceding year corresponding quarter, with no material changes in segment results, which remained a loss of approximately RM0.91 million.
Property Division
The Property Division was a key driver of the overall revenue increase, recording RM4.80 million in the current quarter compared to RM3.09 million in the preceding year corresponding quarter. This was mainly contributed by the sales of completed properties from Belezza Phase 3 and Pangsa Rakyat Pajam. However, the segment profit saw a decline to RM0.25 million from RM1.44 million. This reduction in profit was primarily due to the preceding year corresponding quarter having recorded a forfeited deposit, which boosted its profitability.
Financial Health: Balance Sheet and Cash Flow
Looking at the broader financial health, CHHB’s balance sheet indicates some shifts:
| Financial Indicator | 31 March 2024 (RM’000) | 31 December 2023 (RM’000) |
|---|---|---|
| Total Assets | 1,000,193 | 1,119,576 |
| Total Equity | 609,095 | 614,773 |
| Cash and Bank Balances | 9,387 | 11,493 |
Total assets slightly decreased from RM1.12 billion at the end of 2023 to RM1.00 billion as of 31 March 2024. Total equity also saw a minor reduction. Cash and bank balances declined to RM9.39 million from RM11.49 million at the end of last year, indicating a tighter cash position.
From a cash flow perspective, the net cash used in operating activities improved slightly, moving from RM647k outflow in Q1 2023 to RM597k outflow in Q1 2024. However, net cash used in financing activities significantly increased to RM1.04 million from RM0.46 million in the corresponding period last year, indicating higher repayments or other financing outflows.
A positive note on the balance sheet is the significant reduction in total borrowings, which stood at RM41.55 million as of 31 March 2024, a notable decrease from RM107.76 million in the corresponding period last year. This suggests an effort to deleverage, which is a healthy sign for long-term financial stability.
Risks and Prospects: Charting the Path Ahead
The Malaysian economic outlook for Q1 2024 remains moderately positive, with GDP growth forecasted at 4.5%. This is supported by resilient domestic expenditure, stronger external demand, and a continued rebound in the tourism sector. Government economic reforms and fiscal measures, especially for SMEs and healthcare, are expected to provide further support. However, inflationary pressures and higher interest rates remain areas of concern that could impact consumer spending and business costs.
CHHB is actively pursuing several initiatives across its divisions to enhance performance:
- Healthcare: The Group is focused on introducing sub-specialty treatments, enhancing clinical care, and expanding its share in the health tourism market, which is expected to grow significantly.
- Resorts & Hospitality: This sector is poised to benefit from the ongoing rebound in local and international travel, further boosted by visa-free initiatives for visitors, particularly from China.
- Exhibition & Convention (MICE): With a surge in demand across logistics, health, and tourism, CHHB’s MIECC is undergoing internal upgrades and building strategic partnerships with agencies like MYCEB to promote and relaunch the MICE/Business Events community in Southeast Asia.
- Property: The Group anticipates continued growth in its property sector due to encouraging demand for premium and medium properties, ongoing projects nearing completion, and new collaborative projects under discussion.
Despite these positive outlooks, the report also highlights several material litigations the company is involved in. These include arbitration related to a joint venture, a dispute concerning directorships, and several suits regarding financing facilities. While the company is engaging legal counsel, these ongoing litigations represent potential financial and operational risks that warrant close monitoring.
Summary and Outlook
Country Heights Holdings Berhad’s Q1 2024 results present a mixed bag: an increase in revenue driven by property sales, yet a widening of losses primarily due to comparative factors from the previous year’s one-off gains and higher operating costs in some segments. The company’s strategic initiatives across its diverse portfolio, particularly in healthcare, hospitality, MICE, and property, align well with the positive trends in the broader Malaysian economy, especially the recovering tourism sector.
While the reduction in overall borrowings is a positive sign for financial stability, the widening losses and ongoing litigations highlight areas that require careful management. The company remains confident in its ability to strengthen and expand its core businesses, leveraging the improving economic environment and its targeted growth strategies.
Key points from the report:
- Revenue growth indicates market traction, especially in property.
- Losses widened due to specific comparative factors and increased operating costs.
- Strategic initiatives are underway to capture growth in tourism, healthcare, and MICE.
- Significant reduction in borrowings improves financial health.
- Ongoing material litigations present potential risks that need to be monitored.
From a professional standpoint, CHHB’s efforts to streamline operations and expand into new revenue streams within its existing segments are commendable. The focus on health tourism and leveraging the rebound in conventional tourism could yield positive results in the coming quarters. However, the consistent losses across several segments and the ongoing legal challenges suggest that the path to sustainable profitability might still be challenging. Investors will need to observe if the strategic initiatives translate into tangible improvements in the bottom line and if the litigations are resolved favorably.
What are your thoughts on CHHB’s latest performance? Do you think the company can maintain this growth momentum in revenue and eventually turn the tide on its profitability in the next few years? Share your views in the comments section below!
