Hiap Teck Venture Berhad (HTVB) Delivers Strong Q2 FY2026 Results: Profit Surges on Joint Venture Contribution

Key Highlights

• Revenue up 14% YoY to RM397.4 million for Q2 FY2026, with cumulative revenue at RM781.6 million (+4% YoY).
• Net profit for the quarter soared 232% YoY to RM68.9 million. Cumulative net profit for 6M FY2026 reached RM112.6 million (+102% YoY).
• Exceptional contribution from Joint Venture (Eastern Steel Sdn. Bhd.), with share of profit surging to RM70.6 million for the quarter (up 179% YoY), and RM106.4 million for 6M FY2026 (+58% YoY).
• Basic earnings per share (EPS) increased to 3.95 sen (Q2 FY2025: 1.17 sen). 6M FY2026 EPS at 6.44 sen (6M FY2025: 3.16 sen).
• Net assets per share improved to RM0.9119 (31 Jan 2026) from RM0.8523 (31 Jul 2025).
• Interim dividend of 0.5 sen per share paid in January 2026.

Operational & Financial Review

Revenue and Segment Performance

HTVB saw its Q2 FY2026 revenue grow to RM397.4 million from RM348.3 million in the previous year’s corresponding quarter, driven mainly by a 54% surge in Trading division sales (RM240.4 million vs RM156.4 million). This was attributed to higher trading volumes despite softer average selling prices. Conversely, the Manufacturing division saw a 22% revenue drop to RM154.1 million, impacted by lower sales volumes and weaker pricing.

The consolidated gross profit margin increased to 5% (Q2 FY2025: 4%). Profit from operations jumped to RM5.3 million (Q2 FY2025: RM0.3 million), reflecting lower cost of sales and reduced trading division losses.

Joint Venture Performance – Significant Profit Driver

The Eastern Steel Sdn. Bhd. (ESSB) joint venture was the standout profit contributor, posting a share of profit of RM70.6 million for the quarter (Q2 FY2025: RM25.3 million) and RM106.4 million for 6M FY2026. The improvement stemmed from stronger operational performance, a higher proportion of Hot Rolled Coil (HRC) sales, and positive foreign exchange translation impacts.

Profitability and Earnings

Profit before tax (PBT) surged to RM71.3 million for the quarter (Q2 FY2025: RM20.3 million). Net profit attributable to shareholders was RM68.8 million (+237% YoY). EPS for the quarter was 3.95 sen. For the cumulative six months, profit attributable to shareholders was RM112.3 million (EPS: 6.44 sen).

Profitability was significantly higher not only YoY but also QoQ, with PBT up 52% compared to Q1 FY2026, largely due to the joint venture’s almost doubled profit contribution.

Balance Sheet and Cash Flow

• Total assets: RM2.17 billion (31 Jan 2026)
• Total equity: RM1.59 billion; net assets per share: RM0.9119
• Cash and cash equivalents: RM99.2 million (up from RM94.97 million at FY2025 end)
• Borrowings: RM516.6 million (slight increase from RM485.2 million at FY2025 end).
• Net cash from operating activities: Outflow of RM15.8 million for 6M FY2026 (inflow of RM56.9 million in previous year), due to significant movements in working capital despite higher profits.

Dividend and Capital Commitment

• Dividend: Single tier dividend of 0.5 sen per share paid in January 2026, totaling RM8.71 million.
• Capital commitments: RM3.59 million outstanding (as at 31 Jan 2026), for property, plant, and equipment.

Strategic Developments

• New Investment in Industrial Park: Hiap Teck Resources Sdn. Bhd. (a wholly-owned subsidiary) subscribed to a 27.3% stake in East Coast Eastern Steel Industrial Park Sdn. Bhd. (ECESIPSB) in January 2026. ECESIPSB, majority-owned by Jianlong Holdings Sdn. Bhd., will operate and manage the new industrial park being developed within the ESSB plant area in Kemaman, Terengganu. This initiative aims to attract investments to support ESSB’s industrial chain.
• Related Party Transactions: Notable purchases of steel products from JK Ji Seng Sdn. Bhd. (RM190.5 million in 6M FY2026) and rent paid to Pedoman Cekap Sdn. Bhd. (RM308,000) were disclosed. Both transactions were conducted at arm’s length and are not detrimental to minority shareholders.

Outlook & Prospects

Industry headwinds persist, with global steel prices under pressure due to excess supply and cautious demand, notably from elevated Chinese exports. Geopolitical risks, including those in the Middle East, could further impact energy and logistics costs.

Malaysia’s economy continues to show resilience, with GDP growth of 6.3% in Q4 2025 and 5.2% for FY2025, supporting construction and manufacturing activity. The government’s Steel Industry Roadmap 2035 and carbon-related regulations may shape the industry’s medium-term outlook.

ESSB’s 1,450 mm Hot Rolled Coil line is improving in operational performance and utilisation, which should continue to benefit the Group’s results.

The Group’s strategy remains focused on operational efficiency, prudent cost management, and disciplined trading, while leveraging its diversification.

Other Noteworthy Points for Shareholders

• No significant changes in group structure except for the ECESIPSB investment.
• No material litigation and no new corporate proposals as at the date of reporting.
• No contingent liabilities or assets reported.
• No interim dividend declared for the current quarter, following the payment made for FY2025.
• No audit qualifications on the latest annual financial statements.

Potential Price-Sensitive Factors

• Sharp increase in profit, primarily from joint venture performance, may positively influence market sentiment and share price.
• Improvement in net asset per share and strong cash position provide downside support to valuation.
• Investment in ECESIPSB positions HTVB for future growth via industrial park management and integration with steel operations.
• Exposure to global steel market volatility and geopolitical risks remains a key concern for forward earnings.

Conclusion

Hiap Teck Venture Berhad delivered a standout quarter, underpinned by a remarkable turnaround in profitability, thanks to the exceptional performance of its joint venture. The Group’s balance sheet remains robust, and recent strategic investments could further enhance its industrial ecosystem. However, investors should watch for ongoing industry volatility and global economic risks.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult their financial advisors before making investment decisions. The author and publisher accept no liability for any loss arising from the use of the information presented above.

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