Hong Fok Corporation Limited (HFC): 1H 2025 Financial Analysis and Investor Outlook

Hong Fok Corporation Limited, a Singapore-based property investment and development group, has released its unaudited condensed interim financial statements for the six months ended 30 June 2025. Below, we analyze key financial metrics, highlight notable trends, and provide an investor outlook based strictly on the information disclosed in the report.

Key Financial Metrics and Performance Table

Performance Highlights and Trends

• Revenue Growth: Revenue rose 5% YoY to \$46.9 million, mainly from higher sales of residential units at Concourse Skyline and steady commercial property income, partially offset by a decline from YOTEL Singapore Orchard Road.
• Profit Surge: Net profit for the period jumped 80% YoY to \$4.94 million, benefiting from higher development property sales and a positive swing in fair value of investments.
• EPS Growth: EPS increased sharply to 0.85 cents from 0.57 cents YoY.
• Dividends: No interim dividend was declared. The last dividend was a final dividend of 1.0 cent per share for FY24, consistent with the prior year.
• Net Asset Value (NAV): NAV per share slipped slightly to 358 cents from 361 cents at end-2024, impacted by translation losses on Hong Kong properties.
• Operating Cash Flow: Net cash from operations was \$18.76 million, primarily from rental income and property sales. However, significant outflows occurred in investing activities due to property and equity investments.
• Borrowings: Total loans and borrowings increased, with a notable reclassification of a secured loan to current liabilities as it nears maturity in 2026.

Exceptional Items and Asset Revaluation

• Asset Revaluation: No external valuation of investment properties was conducted as of 30 June 2025. Management assessed that the latest appraised values (from Dec 2024) remain appropriate with no significant market changes. Notably, there was a sizeable translation loss on Hong Kong properties, offsetting new purchases in Singapore.
• Exceptional Gains/Losses: The period saw a turnaround in fair value of other investments, with a \$1.17 million gain versus a \$0.78 million loss in the prior period. There was also a one-off gain from the sale of a remnant land plot at University Road.
• No Related-Party Concerns: The report notes no material related-party transactions or mandates for interested person transactions.
• Dividend Policy: The company reiterates its practice of proposing final dividends at the AGM, with no interim payout for 1H 2025.

Management Discussion and Outlook

Management comments:

“The Group posted a revenue of approximately \$46.9 million for this period as compared to approximately \$44.6 million for the previous corresponding period. The net increase in revenue of approximately \$2.3 million was mainly due to higher revenue from the sale of its residential unit in Concourse Skyline. The commercial investment properties also generated higher revenue but this was offset by lower income from YOTEL Singapore Orchard Road (“YOTEL”). … The increase in employee benefit expenses in this period was mainly due to the provision of other long-term employee benefits for certain Management under the ex-gratia payment plan for a period of time. … Overall, the Group posted a profit of approximately \$4.9 million as compared to approximately \$2.7 million in the previous corresponding period. Consequently, the Group’s profit attributable to Owners of the Company was approximately \$5.4 million as compared to approximately \$3.6 million in the previous corresponding period.”

Chairman’s/Management Tone: The commentary is broadly neutral-to-positive. Management highlights ongoing operational challenges, especially in the hotel segment, but expresses confidence in rental stability for commercial properties and expects further revenue recognition from residential sales in 2H 2025. Cost discipline, proactive marketing, and a steady approach to refinancing are emphasized.

Events & Risks Impacting Business

• Currency Risk: The strengthening Singapore dollar led to translation and exchange losses, particularly affecting Hong Kong assets and cash balances.
• Hotel Segment Challenges: YOTEL Singapore performance was impacted by operational headwinds and currency effects, with management focusing on volume-led strategies and cost control.
• Loan Maturity/Reclassification: A secured loan reclassified as current liability is expected to be refinanced or repaid by its 2026 maturity.
• Residential Market Competition: Strong competition from new launches may affect the pace of sales at Concourse Skyline.
• No Interim Dividend: Investors should not expect any interim dividend for 1H 2025.

Conclusion and Investor Recommendations

Overall Assessment: Hong Fok Corporation delivered a solid set of results for 1H 2025, marked by higher revenue and profits mainly from residential property sales and investment gains. Operating cash flows remain healthy, and the property investment segment is expected to provide stable income. However, the company faces headwinds from currency movements and hotel segment challenges, and there was a minor decline in NAV per share due to translation losses.

• If you currently hold the stock: The results suggest a stable outlook with moderate growth potential, underpinned by rental income and property sales. Holders may consider maintaining their position, but should monitor currency risk and the hotel segment’s performance closely. The absence of an interim dividend is consistent with past practice and not a negative surprise.
• If you are not holding the stock: Investors seeking exposure to Singapore commercial property with a value focus may consider initiating a position if willing to accept the risks associated with Hong Kong asset exposure and potential short-term volatility in the hotel segment. Entry may be more attractive if management provides greater clarity on refinancing and market conditions stabilize.

Disclaimer: This analysis is based solely on information disclosed in Hong Fok Corporation Limited’s interim financial report for 1H 2025. It is not investment advice. Investors should conduct their own due diligence and consider their own financial circumstances and risk tolerance before making investment decisions.

View Hong Fok Historical chart here