Hafary Holdings Limited: Interim Financial Review for the Six Months Ended 30 June 2025

Hafary Holdings Limited, a leading supplier of building materials in Singapore and the region, released its interim financial statements for the half-year ended 30 June 2025. The results reflect robust revenue growth, steady profitability improvements, and ongoing strategic investments, despite an evolving macroeconomic backdrop across its core markets.

Key Financial Metrics and Performance Overview

Segmental Performance Highlights

• General Segment: Revenue remained stable at \$63.5m, reflecting relatively flat demand from retail and small project customers.
• Project Segment: Revenue rose 7.1% to \$40.3m, partly due to a new revenue stream from the recently acquired subsidiary in China.
• Manufacturing Segment: Revenue more than doubled (+133.6%) to \$33.4m. This was driven by ramp-up in production at the Kluang, Malaysia plant, which began operations in June 2023.
• Other Income: Rental income grew 35% to \$3.4m. Other gains also reflected higher rental yields and foreign exchange impacts.

Historical Performance and Trends

Hafary Holdings has demonstrated consistent revenue and profit growth over the past year. The group’s ability to scale its manufacturing operations in Malaysia and its expansion into China have been key contributors to the surge in top-line and bottom-line numbers. However, the gross profit margin declined slightly, attributed to higher cost of sales outpacing revenue growth.

Exceptional Items and Notable Events

• Impairment Losses: The group recognized impairment losses of \$0.6m, mainly from inventory provisions and bad debts.
• Foreign Exchange Losses: Other comprehensive loss of \$2.0m was due to currency translation differences from overseas operations and associates.
• Acquisition: Hafary acquired 100% of MML (Shanghai) Trading Co., Ltd. in January 2025, introducing new revenue and expense streams.
• Dividends: Interim (0.75 cent) and special interim (0.5 cent) dividends per share were maintained at last year’s levels, demonstrating commitment to shareholder returns.

Balance Sheet and Cash Flow Analysis

• Total Assets: Decreased to \$500.2m from \$512.0m at 31 Dec 2024, reflecting lower cash balances and trade receivables, partly offset by higher inventories.
• Net Asset Value per Share: Rose to \$0.311, reflecting retained earnings growth.
• Operating Cash Flow: Strong inflow of \$23.4m, reversing outflows in the prior period. This was driven by improved working capital management and higher profitability.
• Investing Activities: Outflows of \$2.7m, mainly for plant and equipment.
• Financing Activities: Outflows of \$23.1m, due to debt repayments, dividends, and lease payments.
• Gearing: Loans and borrowings (total \$268.3m) remain high but are being actively managed, with repayments outpacing new borrowings.

Macroeconomic and Industry Environment

• Singapore: Construction sector expanded 4.9% YoY in Q2 2025, supported by public sector projects and robust construction demand forecasts.
• Malaysia: Sector projected to grow by 6.1% in 2025, aided by infrastructure spending and property sector recovery.
• Global: World Bank expects global growth to slow to 2.3% in 2025, with risks from trade barriers, policy uncertainty, and external shocks.

Related Party Transactions and Corporate Actions

• Related Party Transactions: Continued purchases and rental expenses with Malaysian Mosaics Sdn Bhd, and other related entities, including management fees, rental recharges, and employment cost recharges. All transactions were conducted under existing mandates or at arm’s length.
• No share buybacks, placements, or dilution actions were reported in the period.

Dividend Summary

Outlook and Risks

The group expects construction demand to remain healthy in Singapore and Malaysia, supported by public infrastructure and recovery in the property sector. However, management is vigilant of potential headwinds, including global economic slowdown, rising material costs, labor shortages, and currency volatility. The group states its commitment to prudent financial management and supply chain monitoring.

Conclusion

Overall, Hafary Holdings Limited delivered a strong performance in HY2025, marked by double-digit revenue and profit growth, improved operating cash flows, and continued shareholder distributions. Expansion in manufacturing and new market entries are bearing fruit, though margin pressures and macroeconomic risks persist. The financial position remains solid, with an improving net asset value per share and actively managed debt levels. Barring unforeseen shocks, the outlook appears positive, with the group well-placed to capitalize on regional construction sector momentum.

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