HCK Capital Group Berhad’s Q1 2025: Navigating a Challenging Quarter Amidst Strategic Shifts
Greetings, fellow investors and market enthusiasts! Today, we’re diving into the latest financial disclosures from HCK Capital Group Berhad for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s performance, revealing a period marked by significant shifts in its financial landscape. While the numbers show a substantial decline in revenue and a move into the red, the company outlines a clear strategic path forward. Let’s break down the key figures and what they mean for HCK Capital Group.
Key Takeaway: HCK Capital Group Berhad reported a notable decrease in revenue and shifted to a pre-tax loss for Q1 2025, primarily due to the completion of major property projects. Despite this, the company remains cautiously optimistic, focusing on monetizing existing inventories and strategically launching new projects in the affordable housing segment.
Core Financial Performance: A Closer Look at the Numbers
The first quarter of 2025 presented a stark contrast to the same period last year, primarily driven by the property segment’s performance. Here’s a breakdown of the key financial indicators:
Revenue
HCK Capital Group’s revenue experienced a significant contraction, reflecting the maturity of its existing projects.
Q1 2025 Revenue
RM 24.19 million
Q1 2024 Revenue
RM 214.02 million
This represents an approximately 88.7% decrease compared to the previous corresponding quarter. The company attributes this to the completion of most projects, which have already achieved over 90% sales, leading to lower revenue recognition from completed inventories. New projects are still in their early stages, with revenue expected to be recognized progressively as sales and construction advance.
Profitability
The reduced revenue directly impacted the Group’s profitability, leading to a pre-tax loss.
Q1 2025 (Loss) Before Taxation
RM (2.16) million
Q1 2024 Profit Before Taxation
RM 8.56 million
Q1 2025 (Loss) After Taxation
RM (3.06) million
Q1 2024 Profit After Taxation
RM 6.06 million
The shift from profit to loss was primarily due to the significantly lower revenue, which was insufficient to cover sales and marketing expenses, interest expenses, and other operating costs. Consequently, Basic Earnings Per Share (EPS) also turned negative.
Q1 2025 Basic EPS
(0.26) sen
Q1 2024 Basic EPS
1.10 sen
Segmental Performance: Property Dominates the Narrative
The segmental breakdown clearly illustrates that the “Properties” division is the primary driver of the Group’s revenue and, consequently, its recent performance dip.
| Segment | Q1 2025 Revenue (RM ‘000) | Q1 2024 Revenue (RM ‘000) | Change (%) |
|---|---|---|---|
| Properties | 24,195 | 213,132 | -88.65% |
| Others | 0 | 885 | -100.00% |
The “Properties” segment saw its external revenue drop drastically from RM213.13 million in Q1 2024 to RM24.19 million in Q1 2025. The “Others” segment also saw its external revenue diminish to zero. This reinforces the narrative that the Group’s financial results are heavily tied to the sales and completion cycles of its property development projects.
Financial Health and Cash Flow
As of 31 March 2025, HCK Capital Group’s Net Assets Per Share attributable to owners of the parent remained stable at RM 0.81, consistent with the figure at 31 December 2024.
From a cash flow perspective, the Group generated RM 6.39 million from operating activities, a significant reduction from RM 190.10 million in Q1 2024. Investing activities generated RM 0.43 million, while financing activities used RM 12.32 million. This resulted in a net decrease in cash and cash equivalents of RM 5.49 million for the quarter.
Risks and Future Prospects: Navigating the Headwinds
HCK Capital Group acknowledges the challenging external environment but maintains a cautiously optimistic outlook, particularly for the property sector in Malaysia. The company highlights several strategic initiatives to navigate the current landscape:
- Economic Backdrop: Malaysia’s economy is expected to show positive growth, supported by domestic demand, a positive labour market, and income-related policy measures like minimum wage and civil servant salary revisions. However, proposed increases in US tariffs pose potential headwinds to external trade and investment climate.
- Prudent Operations: The Group will remain prudent in all business operations, focusing on the sale and completion of ongoing projects and the monetisation of completed inventories.
- Disciplined Financial Management: Continuous focus on disciplined financial management is crucial to navigate the rapidly changing market environment.
- Strategic New Project Developments: New project developments will be strategically planned to align with current demand, especially in the affordable housing segment, which has shown favourable responses and high take-up rates.
- Potential Industry Boost: The recent announcement by Bank Negara Malaysia (BNM) to decrease the Statutory Reserve Requirement (SRR) ratio from 2% to 1% could potentially benefit the property industry by increasing lending capacity.
- Future Launches: The Group anticipates sales growth in 2025 through the launching of new projects and new phases of its ongoing projects in key areas like Subang Jaya, Cyberjaya, Sepang, U9 Heights of Shah Alam, and Semenyih.
Summary and Investment Considerations
HCK Capital Group Berhad’s Q1 2025 results reflect a period of transition as its major property projects reach completion, leading to a temporary dip in revenue and profitability. This is a common phase for property developers as they cycle through project lifespans. The significant drop in revenue and shift to a loss are primarily a consequence of this project lifecycle rather than a fundamental flaw in operations.
The company’s strategy to focus on monetizing existing inventories and strategically launching new projects, particularly in the resilient affordable housing segment, appears sound. The potential positive impact of BNM’s SRR reduction on lending capacity could also provide a tailwind for the property sector. While the immediate outlook presents challenges, HCK Capital Group’s proactive measures and pipeline of new launches indicate a clear direction for future growth.
Key points from this report include:
- Revenue Contraction: A substantial decrease in Q1 2025 revenue compared to Q1 2024, largely due to major project completions.
- Shift to Loss: The Group recorded a pre-tax loss, impacted by lower revenue and ongoing operational expenses.
- Strategic Focus: Emphasis on selling completed inventories and planning new launches in high-demand areas, particularly affordable housing.
- Market Optimism: Cautious optimism for the Malaysian property sector, supported by domestic demand and potential benefits from BNM’s policy.
What are your thoughts on HCK Capital Group Berhad’s performance this quarter? Do you believe their strategy to focus on new launches and the affordable housing segment will be enough to turn the tide in the coming quarters? Share your insights in the comments below!
