Willas-Array Electronics Interim Report 2025: Financial Results, Segment Performance & No Interim Dividend Declared

Willas-Array Electronics (Holdings) Limited Interim Report Analysis: 1H FY2025

Willas-Array Electronics (Holdings) Limited (“WA” or “the Company”), dual-listed in Singapore and Hong Kong, delivered its unaudited interim financials for the six months ended June 30, 2025. The report showcases a notable turnaround, with the Group swinging from a loss in the prior period to a healthy profit, driven by margin improvement, reversal of inventory and receivable impairments, and strategic cost management. Below, we analyze key metrics, business drivers, segment trends, and corporate events affecting shareholder value.

Key Financial Metrics and Performance Comparison

Metric	1H FY2025	2H FY2024	1H FY2024	YoY Change	QoQ Change
Revenue	HK\$1,158.8m	HK\$1,183.5m (inferred)	HK\$1,183.5m	-2.1%	-2.1%
Gross Profit	HK\$113.7m	HK\$35.2m (inferred)	HK\$35.2m	NM	NM
Profit/(Loss) Before Tax	HK\$19.7m	(HK\$78.1m) (inferred)	(HK\$78.1m)	NM	NM
Net Profit/(Loss)	HK\$20.7m	(HK\$78.6m) (inferred)	(HK\$78.6m)	NM	NM
EPS (Basic)	23.63 HK cents	(89.64 HK cents) (inferred)	(89.64 HK cents)	NM	NM
Interim Dividend	Nil	Nil	Nil	No Change	No Change

Note: “NM” means Not Meaningful due to the swing from loss to profit.

Historical Performance Trends

WA’s financial turnaround in 1H FY2025 is driven by several factors:

Gross profit margin increased sharply from 3.0% to 9.8% due to reversal of inventory allowances and improved pricing.
Inventory turnover improved to 2.0 months from 2.2 months, reflecting healthier stock levels and normalization after prior period clearance efforts.
Operating cash flows rebounded to HK\$219.6m inflow (vs. HK\$70.3m outflow last year), mainly from inventory reduction and payables management.
Net gearing declined from 139.9% to 104.9%, aided by lower borrowings and improved profitability.

Segment Analysis

Automotive: Grew 8.2% YoY, benefiting from expanded client base and deeper domestic partnerships.
Industrial: Fell 2.7% due to the strategic suspension of low-margin, high-risk client business.
Home Appliance: Dropped 2.8% amid slow order fulfillment and downstream overstocking.
EMS: Down 1.7% after a major OEM project entered end-of-life.
Dealer, Audio & Video, Telecom, Lighting: All declined (Dealer -11.4%, Audio & Video -17.3%, Telecom -11.7%, Lighting -20.6%) due to client exits, US sanctions, and channel shifts.
Others: Grew 12.9%, driven by new brands and entry into the drone sector.

Exceptional Items and Asset Revaluation

Inventory Allowance Reversal: HK\$18.9m reversed this period, versus a HK\$41.8m provision last year.
Trade Receivable Impairment: HK\$7.0m reversal due to prior over-provision.
No asset revaluation losses in 1H FY2025; prior period saw a HK\$7.0m loss on owned properties revaluation.
Other Income: Rose on higher rental receipts and a one-off tax rebate.

Corporate Actions and Events

Fundraising & Share Placement: In June-July 2025, WA placed 15 million new shares, raising HK\$39.9m at HK\$2.66/share, dilution of ~14.61% post-issue. This strengthens capital for expansion and working capital.
No Share Buybacks or Redemptions: No treasury shares held as at June 30, 2025.
Related-Party Transactions: Interest expense of HK\$4.8m paid to ultimate holding company Shanghai YCT for working capital loans. Purchases and rental income also occurred with related parties.
Directors’ Remuneration: Directors and key management received HK\$5.3m in the period, up from HK\$3.8m last year; remuneration is performance and market-benchmarked.
No dividend declared for 1H FY2025, as management prefers to retain cash for growth.

Chairman’s Statement

Amid persistent U.S.-China tariff tensions and resulting market uncertainties, the Group is strategically positioning itself to thrive in a complex global environment. Leveraging over 40 years’ experience and the new synergy with Shanghai YCT, the Group aims to establish a robust overseas expansion platform capable of navigating intricate supply chain dynamics and responding to the relocation trends of its client base. This initiative is designed to sustain current business operations while unlocking new growth opportunities in emerging markets. Domestically, the Group continues to face challenges stemming from weak demand, particularly in the real estate and consumer sectors, necessitating a proactive and diversified approach.

The tone is cautiously optimistic: management acknowledges macro risks but emphasizes new market entry, EV segment focus, and strategic flexibility.

Strategic Priorities and Outlook

WA’s strategy is to deepen its electric vehicle market focus, build segment leadership in automotive and audio, launch a collaborative platform for clients expanding overseas, introduce a flexible partner program to support key accounts, and optimize client selection using analytics. The Company expects these moves to enhance resilience, capture growth in electrification and innovative components, and weather ongoing geopolitical and economic challenges.

Liquidity, Capital Structure, and Borrowings

Cash Balance: HK\$49.6m (up from HK\$41.4m end-FY2024)
Bank Borrowings: HK\$365.2m, mainly RMB-denominated, with fixed rates averaging 3.47% and variable rates at 3.90%.
Trust Receipt Loans: HK\$25.1m (down from HK\$140.0m), repaid from placement and operating cash flow.
Loans from Ultimate Holding Co.: HK\$78.8m (down from HK\$163.2m), unsecured, 6.8% interest.
Unutilized Banking Facilities: HK\$427.8m, providing ample liquidity for operations and expansion.

Significant Events and Risks

No legal disputes, natural disasters, or major regulatory changes reported in the period.
Ongoing risks from US-China trade tensions, sector demand softness, and client relocations.
No contingent liabilities as of reporting date.

Conclusion and Investor Recommendations

Performance & Outlook: WA’s 1H FY2025 results mark a strong recovery, with profit, cash flow, and margins rebounding sharply. The turnaround is driven by margin discipline, inventory and receivable management, and cost controls rather than revenue growth. The Company’s strategy to focus on EV, diversify clients, and expand overseas is promising, but macro uncertainties and sector headwinds remain.

If You Currently Hold WA Stock: The positive swing in profitability, improved balance sheet, and strategic direction support a hold recommendation. Investors should monitor execution of the EV and overseas expansion strategy, and watch for any reversal in margin gains or deteriorating segment performance. The lack of interim dividend may disappoint income-focused investors, but capital is being retained for growth.

If You Do Not Currently Hold WA Stock: Consider accumulating a modest position if you seek exposure to China’s electronics supply chain, EV market, and a turnaround story. Wait for further confirmation of sustained margin improvement and successful execution of new strategy, especially in the face of external risks. Entry at post-placement prices may be attractive if the Company continues to deliver operational gains.

Disclaimer: This analysis is based solely on information provided in the Company’s interim financial report. It does not constitute investment advice and investors should conduct their own due diligence or consult a professional advisor before making investment decisions. Market conditions and Company performance can change rapidly.