HEXTAR CAPITAL BERHAD Q3 2025 Latest Quarterly Report Analysis

Hello, discerning investors and market watchers!

Today, we’re diving deep into the latest quarterly interim financial report from Hextar Capital Berhad (HCB) for the period ended 30 June 2025. It’s a report that paints a picture of a company actively navigating a dynamic market landscape, showcasing both strategic shifts and impressive resilience.

While we observe a dip in revenue this quarter, the underlying story is one of significant profit growth, driven by strategic operational adjustments and robust contributions from its associate companies. The headline numbers are certainly attention-grabbing: a remarkable surge in profit after tax for the quarter and an even more impressive five-fold increase year-to-date! Add to that, a massive new contract secured by one of HCB’s key associates in the power sector.

Core Data Highlights: A Closer Look at the Numbers

Hextar Capital’s latest financial report reveals a quarter of contrasting figures, with revenue experiencing a notable contraction while profitability surged. Understanding the nuances behind these numbers is crucial for Malaysian retail investors.

Quarterly Performance (Q3 2025 vs. Q3 2024)

Looking at the performance for the quarter ended 30 June 2025 against the corresponding period last year, we see a mixed bag that reflects the company’s evolving business landscape.

The Group’s consolidated revenue for Q3 2025 stood at RM11.5 million, a significant decline of 55.1% from RM25.6 million in the preceding year’s corresponding quarter. This decrease was primarily attributed to lower revenue contribution from the telecommunication network infrastructure solutions segment, as the JENDELA Phase 1 project was completed in Q3 2025. However, this was partially offset by revenue generated from newer business segments, specifically construction and project management, and money lending.

Despite the revenue drop, HCB reported a remarkable profit after tax of RM2.7 million in Q3 2025, marking an impressive 185.9% increase from RM0.9 million in Q3 2024. This surge in profitability can be largely attributed to two key factors: the absence of amortisation of intangible assets (which were fully amortised in the financial year ended 2024), and strong positive contributions from the Group’s associate companies. Consequently, basic earnings per share rose significantly from 0.22 sen to 0.58 sen.

Year-to-Date Performance (9 Months Ended 30 June 2025 vs. 9 Months Ended 30 June 2024)

The cumulative performance for the first nine months of the financial year further underscores the profit-driven growth.

For the nine months ended 30 June 2025, HCB recorded a revenue of RM53.0 million, a 38.0% decrease from RM85.5 million in the preceding year’s corresponding period. Similar to the quarterly trend, this was mainly due to the completion of the JENDELA Phase 1 project, partially offset by new business segments contributing RM20.9 million.

Despite the revenue decline, the Group’s profit after tax surged to RM10.0 million, a spectacular 434.2% increase compared to RM1.9 million in the prior year. This impressive growth was primarily driven by higher share of profits from associates and the aforementioned absence of amortisation charges. Basic earnings per share for the period climbed from 0.42 sen to 2.19 sen.

Quarter-on-Quarter Snapshot (Q3 2025 vs. Q2 2025)

Comparing the current quarter to the immediate preceding quarter (Q2 2025), HCB’s revenue also saw a dip from RM14.8 million to RM11.5 million, a 22.2% reduction. This sequential decrease, along with a lower profit after tax of RM2.7 million (down 26.6% from RM3.7 million), further reflects the immediate impact of the JENDELA Phase 1 project’s completion.

Financial Health and Cash Flow

Beyond the income statement, HCB’s balance sheet and cash flow statement also present a picture of improving financial strength.

• Total Equity: Grew significantly from RM216.3 million at FYE 2024 to RM248.6 million as of 30 June 2025, boosting net assets per share from RM0.46 to RM0.52. This increase is partly attributable to the issuance of new ordinary shares through private placement.
• Total Borrowings: The Group managed to decrease its total borrowings from RM79.1 million at FYE 2024 to RM71.3 million. This reduction is attributed to lower utilisation of bank overdrafts and trade facilities following the completion of the JENDELA Phase 1 project.
• Cash Flow from Operations: A significant turnaround was observed, with net cash from operating activities swinging from a negative RM35.2 million in 9M 2024 to a positive RM14.1 million in 9M 2025. This indicates a much stronger operational cash generation capacity.

It’s important to note that HCB did not declare any dividends for the current quarter under review.

Business Unit Performance: A Diversified Portfolio in Action

Hextar Capital’s diversified business segments are key to its strategy, and their individual performances provide deeper insights into the Group’s direction.

• Construction and Project Management: Wholly-owned subsidiary T & J Engineering Sdn. Bhd. (TJE) continues to make steady progress on the RM97 million Universiti Malaysia Kelantan student hostel project. HCB is cautiously optimistic about securing new construction projects to expand TJE’s portfolio, reinforcing its position in large-scale infrastructure.
• Telecommunication Network Infrastructure Solutions: TJE completed its obligations under JENDELA Phase 1 during the quarter. While this completion led to a decrease in revenue for the segment this period, HCB remains hopeful for participation in the upcoming JENDELA Phase 2, which aims to further strengthen Malaysia’s 5G infrastructure.
• Power Generation and Transmission (Associate): This segment delivered a significant boost through HCB’s associate, Transgrid Ventures Sdn. Bhd. (Transgrid). In a landmark achievement, Transgrid was awarded a substantial RM427.5 million contract by Tenaga Nasional Berhad. This project involves establishing Malaysia’s first 500/275kV Gas Insulated Substation at Gurun East, Kedah. This not only significantly enhances Transgrid’s order book but also positions HCB to benefit from the growing demand for high-voltage energy infrastructure in Malaysia. This is a crucial strategic development.
• Manufacturing (Fibre Optic Cables): This segment continues to face a subdued market demand. The Group is focused on cost optimisation and expanding its engineering capabilities to deliver fibre optic solutions, particularly focusing on installations for data centres, an area with significant growth potential.
• Money Lending: HCB’s money lending segment continues to be a positive contributor to earnings, fulfilling the goal of building recurring income streams while maintaining prudent risk management practices.

Risks and Prospects: Navigating the Future

Hextar Capital is strategically positioning itself to leverage emerging opportunities while proactively managing potential headwinds.

Opportunities:

• High-Value Infrastructure Growth: The Transgrid contract in power generation is a testament to HCB’s ability to tap into critical national infrastructure projects, with potential for long-term recurring revenue from such assets.
• Telecommunication Expansion: Potential participation in JENDELA Phase 2 offers a clear path to continued involvement in Malaysia’s digital transformation and 5G rollout.
• Diversified Income Streams: The consistent positive contribution from the money lending segment helps to diversify earnings and build resilience against sector-specific fluctuations.
• Data Centre Focus: Shifting the fibre optic manufacturing focus towards data centre installations aligns with global digital trends, potentially unlocking new growth avenues in a high-demand sector.
• Strong Project Pipeline: The ongoing UMK student hostel project and cautious optimism for new construction projects highlight a stable base and future growth potential in the construction segment.

Challenges:

• Market Demand Volatility: The fibre optic cables business remains cyclical and dependent on broader economic conditions, presenting a challenge for sustained growth in that particular segment.
• Project Dependency: While large contracts offer significant revenue, the completion of major projects like JENDELA Phase 1 underscores the continuous need to secure new, sizable contracts to maintain revenue momentum in the telecommunications and construction segments.
• Competition: The construction and telecommunications sectors in Malaysia are competitive, requiring HCB to consistently demonstrate its technical capabilities and cost-effectiveness to secure new mandates.

HCB’s management remains confident in its ability to navigate these challenges, citing strong market positioning and a strategy focused on sustainable growth and long-term value creation. The recent private placement also bolsters the company’s financial capacity for future business projects and working capital.

From a professional perspective, Hextar Capital Berhad is demonstrating a commendable level of adaptability and strategic foresight. The company’s ability to significantly boost profitability and earnings per share, even amidst a revenue contraction due to project completion, speaks volumes about its operational efficiency and the value generated by its associate companies. The Transgrid contract is a particularly exciting development, offering a clear pathway for robust, long-term earnings contributions from a critical and growing sector. However, the completion of JENDELA Phase 1 underscores the continuous effort required in project acquisition to ensure sustained revenue momentum for the core operating segments.

What are your thoughts on Hextar Capital’s strategic shift towards high-value infrastructure projects and the performance of its associates? Share your views in the comments section below!