XMH Holdings Delivers Special Dividend and Signals Expansion Amid Data Centre Boom—What Investors Must Know

XMH Holdings Ltd. (SGX: BQX) convened its FY2025 Annual General Meeting (AGM) on 28 August 2025, delivering robust updates and shareholder responses that could significantly impact its share price. Below, we delve into the AGM’s detailed proceedings, highlighting crucial developments, growth signals, and items that investors should watch closely.

Key Financial and Operational Highlights

• Record Revenue & Inventory Surge: The Group posted S\$167.12 million in revenue for FY2025, with inventories doubling to S\$71.91 million and contract assets up to S\$31.91 million. Management clarified that a substantial portion of inventories (S\$30 million) were finished goods pending delivery, indicating strong future sales momentum.
• Special Dividend Windfall: Shareholders approved a final dividend of 0.25 Singapore cents and a special dividend of 7.75 Singapore cents per ordinary share—an exceptional payout that underscores the Group’s robust performance and ample cash reserves.
• Profit Margins & One-off Costs: Gross margin dipped slightly in 2H2025 due to tight project deadlines requiring costly sub-contracting—a situation management asserts is “one-off” and not indicative of future trends.
• Working Capital Expansion: The company’s working capital requirements rose sharply, with increased use of revolving credit facilities (S\$40.46m drawn, S\$35.44m repaid), and ongoing trust receipt activities. Management hinted at the possibility of a new share placement if working capital needs continue to escalate.

Strategic Updates That Could Move Share Price

• Malaysian Data Centre Expansion: XMH is prioritizing growth in Malaysia’s rapidly expanding data centre sector, specifically focusing on Johor, and is considering an expansion of its Mech-Power Generator (MPG) factory to meet surging demand and reduce reliance on sub-contractors.
• Order Book Transparency: Management is considering disclosing order book data at half-yearly results, responding to shareholder calls for greater transparency—a move that could increase investor confidence and market liquidity.
• Bonus Issue & Share Liquidity: With shares currently illiquid, management is open to a bonus issue to improve trading activity, and may engage in SGX market dialogues to increase visibility.
• Renewable Energy Pivot: The Group is assessing opportunities in wind farm service operation vessels (SOVs) in Southeast Asia, potentially diversifying its revenue streams into renewable energy.
• Foreign Currency Risk: The Group’s main FX exposure is to USD and EUR (for genset engine purchases), with JPY risk deemed immaterial due to its subsidiary’s local currency operations.
• Dividend Policy: The company does not have a fixed dividend policy, but management indicated willingness to declare “fair and reasonable” dividends going forward.
• Share Buyback Mandate: Renewal of the share buyback mandate was approved, though management clarified it is opportunistic and mainly used for price stabilization during periods of volatility.

Other Noteworthy Items

• Sub-contracting for Data Centres: Less than 10% of data centre project work is outsourced, but the Group intends to expand the MPG factory to reduce this reliance.
• BUKH Engine Sales: Management expects slow but steady revenue growth from BUKH engine sales in the coming years, though their contribution remains small.
• Tuas Property Utilisation: 90% of the non-operational area of the Tuas Crescent property is sublet, with renewals aligned to market rates. The last valuation was in March 2020.
• Board Stability: All directors up for re-election were returned by unanimous poll, and Ernst & Young LLP was re-appointed as auditor.
• Treasury Shares: The company holds 5,329,850 treasury shares at an average cost of ~50 Singapore cents each. No recent buybacks have occurred.

Potential Price-Sensitive Developments

• Special Dividend Announcement: The unusually high special dividend is a clear sign of strong cash flow and profitability, which may attract new investors and re-rate the share price.
• Expansion in Data Centre Sector: Factory expansion plans and growing order book in Malaysia position XMH as a key beneficiary of the region’s digital infrastructure boom.
• Possible New Share Placement: If working capital needs persist, a new share placement could be on the table—potentially dilutive, but also a signal of aggressive growth ambitions.
• Possible Bonus Issue: Management’s openness to a bonus issue could unlock liquidity and broaden the shareholder base.
• Increased Market Engagement: Plans to engage with SGX and improve investor relations may elevate the company’s profile among institutional investors.

Investor Takeaway

XMH Holdings is entering a new phase of growth, pivoting aggressively toward Malaysia’s data centre industry and exploring renewable energy opportunities. The special dividend, possible bonus issue, and transparency initiatives are all signals of shareholder-friendly management. Investors should closely monitor factory expansion progress, future dividend declarations, and any moves toward new share placements or bonus issues, as these could materially impact share price.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult a professional advisor before making investment decisions related to XMH Holdings Ltd.

View XMH Historical chart here