Greetings, fellow investors! Today, we’re diving into the inaugural quarterly report of
, a newly listed player in Malaysia’s construction sector. As this marks their very first interim financial report for the first quarter ended 31 January 2025, it offers us a foundational glimpse into their operational and financial health.
The report paints a picture of a company hitting the ground running, showcasing a solid revenue base and a profitable start to the fiscal year. With an upcoming listing on the ACE Market, this report is crucial for understanding the company’s initial footing. Let’s break down the key figures and what they mean for this promising new entrant.
First Quarter Financial Snapshot: A Strong Start
For its first quarter ended 31 January 2025, Hartanah Kenyalang Berhad reported a robust performance, setting a positive tone for its journey as a public entity. It’s important to note that as this is their inaugural interim report, there are no comparative figures for the preceding corresponding quarter.
Key Financial Highlights (Q1 FY2025)
- Revenue: RM44.77 million
- Gross Profit: RM5.83 million
- Profit Before Tax (PBT): RM2.61 million
- Net Profit: RM1.89 million
- Basic/Diluted Earnings Per Share (EPS): 0.38 sen
The company’s revenue of RM44.77 million reflects a strong start, primarily driven by its core construction activities. After accounting for administrative expenses and finance costs, the group achieved a commendable Profit Before Tax of RM2.61 million, translating to a net profit of RM1.89 million for the quarter. This initial performance underscores the company’s ability to generate revenue and manage costs effectively in its early stages as a public company.
Segmental Performance: Building the Foundation
Hartanah Kenyalang Berhad’s revenue is primarily derived from two key segments, both demonstrating significant contributions:
| Segment | Revenue (RM’000) | Contribution (%) |
|---|---|---|
| Building construction services | 32,098 | 72% |
| Infrastructure construction services | 12,675 | 28% |
| Total Revenue | 44,773 | 100% |
The building construction services segment was the largest contributor, accounting for 72% of total revenue, or RM32.1 million. This revenue was mainly recognized from significant projects such as the State Archive Project, Yayasan International School Sibu Project, Yayasan International School Kuching Project, Sekolah Daif Tambay Project, and Sekolah Daif Tebedu Project. This diversified project portfolio within building construction highlights the company’s active involvement in various institutional and non-residential developments.
Financial Health: A Snapshot of the Balance Sheet
Comparing the financial position as at 31 January 2025 against the audited figures as at 31 October 2024 (the previous financial year-end), we observe several key movements:
As at 31 January 2025
- Total Assets: RM108,618k
- Total Equity: RM26,887k
- Retained Profits: RM23,886k
- Net Assets per Ordinary Share: 5.39 sen
As at 31 October 2024
- Total Assets: RM90,030k
- Total Equity: RM25,003k
- Retained Profits: RM22,002k
- Net Assets per Ordinary Share: 5.01 sen
The group’s total assets increased by approximately 20.6% from RM90.03 million to RM108.62 million, signaling growth in its asset base. This was supported by a healthy increase in total equity by 7.5% to RM26.89 million, primarily due to the increase in retained profits. Consequently, the net assets per ordinary share also improved to 5.39 sen from 5.01 sen.
A closer look at current assets reveals a significant increase in Contract Assets to RM55.01 million (from RM35.29 million), indicating progress on ongoing projects and unbilled revenue. Cash and cash equivalents also saw a substantial boost, with Cash and Bank Balances rising to RM22.21 million (from RM7.29 million) and Fixed Deposits with Licensed Banks increasing to RM7.28 million (from RM2.39 million), reflecting improved liquidity.
On the liabilities front, total liabilities increased to RM81.73 million (from RM65.03 million), largely driven by an increase in Other Payables and Accruals to RM20.28 million (from RM6.24 million) and Short-term Borrowings to RM22.75 million (from RM14.75 million), mainly from trade financing. While liabilities increased, the growth in assets and equity suggests a managed expansion.
Cash Flow: Healthy Operations and Strategic Investments
The cash flow statement for the first quarter highlights a robust operational cash generation. The group recorded net cash from operating activities of RM16.12 million. This positive cash flow from operations is a strong indicator of the company’s ability to generate cash from its core business, even after accounting for interest and tax payments.
Investing activities saw a net outflow of RM5.41 million, primarily due to additions to pledged fixed deposits and an increase in the Escrow account, which suggests strategic cash management and preparations for future expenditures. Financing activities resulted in a net inflow of RM2.42 million, influenced by the drawdown and repayment of trade financing, alongside the payment of an interim dividend of RM4.0 million.
Overall, these movements resulted in a net increase in cash and cash equivalents of RM13.13 million, bringing the total cash and cash equivalents to RM18.86 million at the end of the quarter. This healthy cash position provides a strong foundation for future operations and growth.
Outlook and Future Prospects: Building for Growth
Hartanah Kenyalang Berhad is optimistic about its future, particularly given the favorable outlook for the construction industry in Sarawak, their principal market. The group’s strategy revolves around two key pillars:
- Further growth in building and infrastructure construction activities in Sarawak: This indicates a focus on their established strengths and leveraging regional development opportunities.
- Securing design and build projects from prospective clients: This move suggests an ambition to expand their service offerings and potentially capture higher-value projects.
A significant upcoming event for the company is its Initial Public Offering (IPO) and listing on the ACE Market of Bursa Malaysia, expected on 9 June 2025. The IPO aims to raise approximately RM19.34 million in gross proceeds, which are earmarked for strategic investments:
- RM3.0 million (15.5%) for the purchase of machinery and IT-related hardware and software, enhancing operational efficiency.
- RM10.49 million (54.2%) for project working capital, supporting ongoing and new project execution.
- RM2.1 million (10.9%) for repayment of borrowings, strengthening the balance sheet.
- RM3.75 million (19.4%) to defray fees and expenses related to the Listing.
These planned uses of proceeds are critical for the company’s expansion, capacity enhancement, and financial stability post-listing. The board of directors expresses optimism about the group’s future prospects, barring unforeseen circumstances, underpinned by their competitive strengths and strategic plans.
Summary and Analysis
Hartanah Kenyalang Berhad’s first interim financial report for Q1 FY2025 showcases a promising start for the construction group. Despite being their inaugural report with no prior comparative quarterly data, the reported revenue of RM44.77 million and a net profit of RM1.89 million demonstrate a solid operational foundation. The company’s strong cash generation from operating activities and healthy cash position are positive indicators of its financial resilience. The upcoming IPO and the strategic allocation of its proceeds for capacity building, working capital, and debt reduction are crucial steps that could underpin its growth trajectory in the vibrant Sarawak construction landscape.
While the initial performance is positive, potential considerations for investors should include:
- The inherent cyclical nature of the construction industry, which can be sensitive to economic fluctuations and government spending.
- Reliance on the East Malaysian market, which concentrates geographical risk.
- The effective utilization of IPO proceeds and the successful execution of their growth strategies will be key to sustaining profitability and expanding market share.
As Hartanah Kenyalang Berhad prepares for its listing, this first quarterly report provides a baseline from which to track its future performance. The focus on building and infrastructure projects in Sarawak, coupled with plans for design and build capabilities, positions them to capitalize on regional development. The strategic use of IPO funds for expansion and debt reduction is a sensible approach.
What are your thoughts on Hartanah Kenyalang Berhad’s maiden financial report? Do you believe their focus on Sarawak and their planned use of IPO proceeds will lead to sustained growth in the competitive construction sector? Share your insights in the comments below!
