Hai Leck Holdings Limited – Financial Analysis Report with 39.7% Net Profit Growth

Business Description

Hai Leck Holdings Limited, domiciled and incorporated in Singapore, is primarily engaged in investment holding and providing managerial, administrative, supervisory, and consultancy services to companies in which it has interests. The company operates through two main business segments: Project and Maintenance Services, and Contact Centre Services. Its operations are primarily based in Singapore.

Industry Position and Competitors

Hai Leck operates within the oil and gas and chemical industries, offering construction and maintenance services. The industry is highly competitive, with the company facing competition from other service providers in the sector. The company’s market share specifics are not detailed in the report.

Revenue Streams

Hai Leck derives its revenue from project and maintenance services and contact center services. For the first quarter ended 30 September 2024, revenue from external customers was \$13.5 million, a decrease from \$17.4 million in the same period in 2023 due to lower revenue in both business segments.

Financial Statement Analysis

Income Statement

For the first quarter ended 30 September 2024, Hai Leck reported a total revenue of \$13.5 million, down from \$17.4 million in the previous year, representing a 22.4% decrease. The gross profit also decreased by 24.6% to \$7.5 million. However, the company saw a significant increase in net profit attributable to equity holders, rising by 39.7% to \$1.8 million, driven by higher other income and reduced operating expenses.

Notable points include a 90.4% increase in other income to \$996,000, and a reduction in administrative expenses by 28.8% to \$3.8 million.

Balance Sheet

As of 30 September 2024, Hai Leck’s total assets amounted to \$127.9 million, with \$86.6 million in current assets. Net current assets stood at \$77.0 million, indicating strong liquidity. Total equity attributable to equity holders was \$112.5 million, up from \$110.1 million as at 30 June 2024.

Cash Flow Statement

Hai Leck generated net cash flows of \$1.3 million from operating activities, primarily due to improvements in working capital. Investing activities generated \$0.7 million, mainly from the disposal of property, plant, and equipment. Financing activities saw a net cash outflow of \$0.2 million.

Dividend Information

No dividends were declared or paid during the financial periods ended 30 September 2024 and 2023.

Key Findings and Recommendations

Strengths

• Significant net profit growth of 39.7% despite a decrease in revenue.
• Increased other income and reduced operating expenses.
• Strong liquidity with net current assets of \$77.0 million.

Risks

• Decrease in revenue by 22.4% due to lower business activity in core segments.
• Potential market uncertainties and competitive pressures in the oil and gas industry.

Report Date and Financial Year

The report is dated 7 November 2024 and covers the financial performance for the first quarter ended 30 September 2024.

Special Activities or Actions

There were no special activities or actions noted in the report aimed at improving profitability.

Investment Recommendations

If Currently Holding the Stock

Given the significant net profit growth and strong liquidity position despite a decrease in revenue, it is recommended to hold the stock. The company has shown resilience through cost management and increased other income.

If Not Currently Holding the Stock

Considering the current market uncertainties and revenue decline, it may be prudent to wait for further clarity on revenue stabilization before investing. Monitoring the company’s ability to sustain profitability and revenue growth is advised.

Disclaimer

This analysis is based on the financial report provided and does not constitute financial advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.