Hafary Holdings Limited FY2025 Financial Results Analysis

Hafary Holdings Limited, a leading supplier of premium tiles and building materials in Singapore and the region, has released its interim financial statements for the year ended 31 December 2025. This analysis provides a structured review of the company’s key financial metrics, performance trends, dividend policies, and forward-looking outlook based strictly on the disclosed report.

Key Financial Metrics and Performance Table

Historical Performance Trends

• Revenue: Full year revenue grew by 9.1% YoY to \$287.0 million in FY2025, up from \$263.1 million in FY2024, driven by strong retail demand in Singapore and an increase in manufacturing sales, especially to the US market.
• Net Profit: Net profit after tax increased 8.2% YoY to \$31.1 million in FY2025, reflecting higher sales and improved margins, despite a softer second half in terms of profit compared to the prior year.
• Gross Profit Margin: Improved from 40.3% in FY2024 to 41.1% in FY2025, with 2H2025 margin at 42.1%.
• EPS: Earnings per share for FY2025 was 6.94 cents, up from 6.40 cents in FY2024.
• Net Asset Value per Share: Increased from 30.0 cents (2024) to 33.9 cents (2025).

Dividends

• Total dividends paid in FY2025: 2.75 cents per share (unchanged from FY2024), comprising two interim dividends (0.75 cents each), a special interim (0.75 cent), and a special interim (0.5 cent).
• Payout ratio: \$11.84 million paid out, consistent with prior year.

Segmental Performance

• General Segment: FY2025 revenue rose 4.0% to \$142.7 million, supported by strong retail sales and increased property transactions and renovations.
• Project Segment: Revenue increased 2.2% to \$81.2 million, aided by the consolidation of the newly acquired MML Shanghai.
• Manufacturing Segment: Most notable growth; up 35.6% YoY to \$63.1 million, due to ramp-up in production and increased exports, especially to the US.

Exceptional Items & Non-Recurring Gains/Losses

• Other Income: Decreased due to the absence of a one-off gain from investment property disposal (\$3.7m in FY2024). FY2025 other income was mainly from rental income (\$6.6m) and negative goodwill from MML Shanghai acquisition (\$0.2m).
• Impairment Losses: Higher allowance for inventory and trade receivables impairments (\$2.7m and \$1.0m, respectively, in FY2025).

Related Party Transactions

• Notable transactions include purchases, sales, rental expenses, and management charges with Malaysian Mosaics Sdn Bhd and other related entities. The company also acquired 100% of MML Shanghai from a related party.
• Aggregate related-party transactions under the controlling shareholder totaled \$4.3m in FY2025 (vs. \$16.8m in FY2024), reflecting a decrease.

Balance Sheet & Cash Flow Highlights

• Non-current assets: Decreased slightly by 1.2% to \$297.5m, with additions in property, plant and equipment offset by depreciation and currency effects.
• Inventories: Rose 6.7% to \$124.1m, in line with business expansion and higher sales activity.
• Borrowings: Total borrowings decreased to \$256.8m (from \$275.9m), reflecting reduced bank debt and lower finance costs.
• Operating Cash Flow: Robust at \$57.8m for FY2025, up from \$22.6m in FY2024, driven by improved working capital management and earnings.
• Cash & cash equivalents: Stable at \$21.5m as at FY2025 year-end.

Macroeconomic & Industry Outlook

• Singapore: Economic growth is forecast to moderate in 2026, but the construction sector remains supported by a strong pipeline of public and private projects. Risks include moderating growth and sector-specific slowdowns.
• Malaysia: Growth to be anchored by domestic demand and strong investment, with construction sector expected to remain stable and benefit from government initiatives.
• Global: IMF and World Bank project resilient global growth but highlight risks from trade tensions and policy uncertainty. Inflation is expected to ease, but uncertainties remain.

Chairman’s Statement

Note: The report did not contain a separate Chairman’s Statement. The tone of management’s commentary in the performance review is measured and cautiously optimistic, highlighting growth in key segments, prudent cost management, and awareness of macroeconomic risks.

Significant Corporate Actions

• Acquisition: The group acquired 100% of MML Shanghai in January 2025. The acquisition resulted in \$0.2m of negative goodwill and expanded the group’s project segment sales footprint in China.
• No share buybacks, dilutions, or placements are disclosed for the period.

Unusual Items & Risks

• Higher impairment allowances for inventories and trade receivables.
• Exceptional gain in the prior year (property disposal) not repeated in FY2025.
• Foreign currency translation losses due to weakening of the Vietnamese Dong.
• Exposure to related-party transactions, though aggregate value has decreased.

Conclusion & Recommendation

Overall Financial Performance: Hafary Holdings Limited has delivered another year of revenue and profit growth, supported by strength in its core Singapore retail business and robust recovery in manufacturing. The company has maintained its dividend payout, improved margins, and reduced borrowings, which collectively signal prudent financial management. However, net profit growth is partly flattered by the absence of prior-year exceptional gains, and there is some pressure from higher impairments and volatile currency translation.

Outlook: The company is positioned to benefit from a strong pipeline in construction and property-related activity in Singapore and Malaysia, though management is cautious about macro risks and moderating growth ahead.

• If you are currently holding Hafary shares: The steady growth in revenue, profit, and NAV per share, alongside consistent dividend payout, suggests continued holding is reasonable for income-focused and long-term investors. The balance sheet remains healthy, and management’s tone is prudent. Watch for any signs of margin compression, further impairment spikes, or sharp macroeconomic downturns.
• If you are not currently holding Hafary shares: Consider accumulating on weakness, especially if seeking exposure to the construction materials sector in Singapore and Malaysia with a consistent dividend. However, be aware that much of the growth is tied to property cycles and subject to regional economic risks. Entry timing should account for potential macro volatility and the absence of major near-term catalysts.

Disclaimer: This analysis is based solely on information disclosed in the company’s FY2025 interim financial report. It does not constitute investment advice. Investors should conduct their own due diligence and consider their risk appetite before making investment decisions.

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