INFRAHARTA HOLDINGS BERHAD: A Turnaround in Progress, But Challenges Remain
Greetings, fellow investors! Today, we’re diving deep into the latest financial report from INFRAHARTA HOLDINGS BERHAD for the financial year ended 31 March 2024 (Q4 FY24). This report offers a fascinating glimpse into the company’s journey, revealing significant revenue growth and a notable reduction in annual losses. However, like any good story, it also presents its share of plot twists, including a recent quarter-on-quarter increase in losses and ongoing legal battles. Let’s unpack the numbers and see what’s truly shaping Infraharta’s future.
Core Data Highlights: A Tale of Growth and Shifting Fortunes
Infraharta’s latest report paints a mixed picture, with impressive top-line growth overshadowed by a complex bottom-line narrative. Here’s a closer look at the key figures:
Full-Year Performance (FY24 vs FY23)
The company demonstrated strong revenue growth over the full financial year, significantly improving its loss position compared to the previous year.
FY24 (12 months ended 31 March 2024)
Revenue: RM56.25 million
Loss Before Tax: RM(9.68) million
Net Loss Attributable to Owners: RM(6.80) million
Basic Loss Per Share: (1.69) sen
FY23 (12 months ended 31 March 2023)
Revenue: RM29.75 million
Loss Before Tax: RM(22.70) million
Net Loss Attributable to Owners: RM(20.30) million
Basic Loss Per Share: (6.26) sen
This translates to an impressive 89% increase in full-year revenue and a substantial 57% reduction in full-year loss before taxation. The net loss attributable to owners also saw a significant 67% reduction. This positive shift is primarily attributed to construction and property development projects reaching their peak stages, driving revenue, and the absence of a goodwill impairment loss (RM1.3 million in the prior year) coupled with a downward adjustment for gross profit (RM6.8 million) in the prior year due to the mutual termination of a Penang Mega Infrastructure Project package.
Fourth Quarter Performance (Q4 FY24 vs Q4 FY23)
Looking at the individual quarter, the growth trend continues:
Q4 FY24 (3 months ended 31 March 2024)
Revenue: RM27.80 million
Loss Before Tax: RM(7.64) million
Net Loss Attributable to Owners: RM(4.47) million
Basic Loss Per Share: (1.13) sen
Q4 FY23 (3 months ended 31 March 2023)
Revenue: RM14.06 million
Loss Before Tax: RM(17.87) million
Net Loss Attributable to Owners: RM(14.38) million
Basic Loss Per Share: (3.90) sen
For the fourth quarter, revenue nearly doubled, showing a 98% increase compared to the same period last year. The loss before taxation was also significantly reduced by 57%. This indicates strong operational momentum in the core businesses.
Immediate Preceding Quarter Comparison (Q4 FY24 vs Q3 FY24)
While the year-on-year figures are positive, the quarter-on-quarter comparison reveals a different story for the bottom line:
| Metric (3 months ended) | 31-Mar-24 (RM’000) | 31-Dec-23 (RM’000) | Change (RM’000) | Change (%) |
|---|---|---|---|---|
| Revenue | 27,798 | 11,671 | 16,127 | 138% |
| Loss before taxation | (7,639) | (628) | (7,011) | 1116% |
| Loss after taxation | (7,782) | (640) | (7,142) | 1116% |
| Net loss attributable to equity holders of the parent | (4,471) | (708) | (3,763) | 531% |
Revenue surged by 138% from RM11.7 million in Q3 FY24 to RM27.8 million in Q4 FY24, again due to both construction and property development segments hitting peak stages. However, the loss before taxation saw a dramatic increase of 1116%, primarily due to the recognition of an RM8.1 million impairment for expected credit losses on trade and other receivables. This highlights a critical area of concern, as significant impairments can quickly erode profits despite strong revenue generation.
Segmental Performance (Full Year FY24)
A deeper dive into the business segments shows where the improvements are stemming from:
- Construction: Revenue jumped to RM47.46 million (from RM23.56 million in FY23), with a reduced loss before tax of RM(8.61) million (from RM(16.63) million in FY23).
- Property Development: This segment turned profitable, recording a loss before tax of RM0.68 million (from a loss of RM(2.34) million in FY23) on revenue of RM8.79 million (from RM6.15 million in FY23). This is a positive development, indicating a potential bright spot for the company.
Financial Health & Funding
As of 31 March 2024, total assets stood at RM87.01 million, a slight decrease from RM88.95 million a year ago. Total equity also saw a decline to RM43.31 million from RM51.20 million. Net asset per share decreased from RM0.14 to RM0.11. Despite this, cash flows from operating activities significantly improved, with net cash used reducing from RM14.36 million in FY23 to RM2.74 million in FY24, indicating better operational efficiency in managing cash.
Notably, the company successfully completed a private placement on March 11, 2024, raising approximately RM2.4 million. These proceeds were fully utilized for funding ongoing projects and working capital, demonstrating the company’s ability to raise funds for its operational needs.
Risks and Prospects: Navigating the Future
Infraharta’s management remains “cautiously optimistic” about its future performance, backed by an outstanding order book of approximately RM71.83 million for construction and property development projects. The company is actively tendering for new construction projects, particularly in earthwork, drainage, roadworks, and infrastructure in West Malaysia, focusing on Pahang and Selangor.
The property development division is also targeting more residential projects, encouraged by positive data from 2022 showing increased property transaction volume and value, coupled with favorable government incentives from Budget 2023. This strategic focus on residential properties could provide a stable growth avenue.
Key Challenges and Risks: The Elephant in the Room
While the operational outlook has positive elements, the report also highlights significant ongoing material litigation that demands attention. The company is involved in two interconnected lawsuits:
- OS 311: Consortium Zenith Construction Sdn. Bhd. (CZC) filed for an injunction to prevent Buildmarque Construction Sdn. Bhd. (BCSB) from presenting a winding-up petition against CZC over an unpaid sum of RM7.37 million. The High Court granted this injunction.
- Suit 443: CZC has, in turn, sued BCSB and Infraharta Sdn. Bhd. (ISB) for a declaration that a previous deed was entered into due to misrepresentation, seeking damages for fraud and other reliefs. BCSB has filed a counterclaim.
These legal proceedings introduce a layer of uncertainty and potential financial exposure. The outcome of these suits could have a material impact on the company’s financial position and reputation. Investors should closely monitor developments in these cases, as they represent a significant non-operational risk.
Summary and
Infraharta Holdings Berhad’s latest quarterly report showcases a company in transition. The robust revenue growth and a significant reduction in annual losses are encouraging signs, particularly the turnaround in the property development segment. The management’s proactive approach to securing new projects and leveraging government incentives for residential property bodes well for future top-line performance.
However, the substantial increase in quarter-on-quarter losses due to impairment charges and the ongoing material litigation are critical areas that warrant close scrutiny. These factors introduce a degree of uncertainty and potential headwinds that could affect the company’s path to sustainable profitability.
As a blogger, my aim is to provide an objective analysis of the reported facts. It is crucial for retail investors to understand that while the operational improvements are positive, the financial health indicators (like declining equity and net asset per share) and the legal risks need careful consideration. The company’s ability to manage these legal challenges and avoid future significant impairments will be key to its long-term stability and growth.
Key risk points highlighted in this report include:
- The recognition of significant impairment for expected credit losses, which can severely impact profitability.
- Ongoing material litigation that could result in substantial financial liabilities or reputational damage.
- The overall decline in total equity and net asset per share, indicating a weakening balance sheet despite operational improvements.
The journey towards sustained profitability appears to be a challenging one for Infraharta. Do you think the company’s strategy and current order book are strong enough to overcome these legal and financial hurdles in the coming years? Share your thoughts in the comments below!
