Harn Len Corporation Bhd. Third Quarter Report: Detailed Financial Review and Investor Insights (Q3 FY2026)

Executive Summary

Harn Len Corporation Bhd. has released its unaudited third quarter report for the period ending 28 February 2026. The report reveals strong revenue growth, improved profitability, significant operational updates, and ongoing legal matters that may impact shareholders. The main business remains in oil palm plantations, with supplementary income from property and other segments.

Key Financial Highlights

• Revenue: RM248.8 million (up from RM212.3 million YoY)
• Gross Profit: RM76.7 million (up from RM60.1 million YoY)
• Profit Before Tax: RM30.99 million (up from RM18.5 million YoY)
• Net Profit/Total Comprehensive Income: RM20.12 million (up from RM11.35 million YoY)
• Basic Earnings Per Share: 3.43 sen (up from 1.92 sen YoY)
• Diluted Earnings Per Share: 3.13 sen (up from 1.80 sen YoY)
• Net Assets Per Share: RM0.5889 (down slightly from RM0.5945)
• Dividend Paid: Special single-tier dividend of 3 sen per share (RM18.51 million) paid in July 2025

Operational Highlights

• Plantation Segment: Contributed 98% of total revenue (RM244.2 million). The increase is driven primarily by higher sales volumes of CPO and PK.
• Production Figures:
  • FFB produced: 127,814 MT (up from 108,751 MT)
  • FFB processed: 216,557 MT (up from 199,784 MT)
  • CPO produced: 43,351 MT (up from 38,504 MT)
  • PK produced: 9,090 MT (up from 8,240 MT)
  • CPO sold: 43,518 MT (up from 38,308 MT)
  • PK sold: 9,164 MT (up from 8,266 MT)
• Average Selling Prices:
  • FFB: RM936/MT (slightly down from RM953/MT)
  • CPO: RM4,071/MT (slightly down from RM4,089/MT)
  • PK: RM3,009/MT (up from RM2,465/MT)
• Property & Other Segments: Contributed RM4.6 million (2% of total revenue). The segment posted an operating loss due to subdued demand for high-rise offices and shops, disruptions from the Johor-Singapore RTS Link project, and extended monsoon affecting shrimp production.

Financial Position

• Total Assets: RM531.14 million (slight decrease from RM533.65 million)
• Total Equity: RM361.70 million (down from RM363.23 million)
• Cash & Cash Equivalents: RM58.54 million (up from RM35.56 million YoY)
• Borrowings: RM77.12 million (down from RM89.36 million)
• Lease Liabilities: RM36.34 million (up from RM33.20 million)

Capital and Corporate Actions

• Warrants: Issued 13,603,464 new shares for RM3.13 million via exercise of warrants. Outstanding warrants: 75,365,169.
• Treasury Shares: Repurchased 10.4 million shares. Treasury shares held: 31.27 million.
• Dividend: Special single-tier dividend of 3 sen/share paid in July 2025 (RM18.51 million).

Cash Flow Update

• Net Cash from Operations: RM44.08 million (up from RM9.28 million YoY)
• Net Cash from Investing: RM11.62 million (up from -RM5.88 million YoY)
• Net Cash Used in Financing: -RM42.59 million (down from RM24.79 million YoY)

Segment Analysis

• Plantations: Main driver of profitability. Improved sales volume offset a slight decrease in average CPO price. CPO price currently hovers between RM4,400 and RM4,700/MT, supported by Indonesian biofuel mandates and elevated crude oil prices.
• Property & Others: Operating loss; impacted by weak rental demand, infrastructure disruptions, and weather-related shrimp farming delays.

Legal and Litigation Update

A potentially price-sensitive item is the ongoing litigation involving subsidiary Harn Len Pelita Bengunan Sdn. Bhd. relating to Native Customary Rights (NCR) land in Sarawak. The High Court awarded nominal damages of RM10,000 to NCR owners after dismissing their claim for damages. The NCR owners have appealed the decision, with the next hearing scheduled for 22 September 2026. This legal matter and its outcome could impact the Group’s operations and share value, depending on the final resolution.

Joint Venture Progress (Sarawak NCR Land)

The Group, via Premium Dragon Sdn Bhd, remains a 60% shareholder in a joint venture developing NCR land in Sarawak. As of 28 February 2026, 6,130 hectares have been planted, and all oil palm trees are matured. FFB production for the year-to-date was 27,350 MT (up from 24,612 MT). Total development expenditure and assets stand at RM67.13 million. Any significant development, expansion, or legal resolution here could impact share value.

Other Notable Points

• No unusual items or material changes in estimates during the quarter.
• No new corporate proposals or changes in group composition.
• No dividend proposed or declared for the current quarter.
• Material capital commitments: RM23.2 million (RM15.0 million authorized but not contracted, RM8.2 million contracted but not provided).

Outlook and Prospects

Management forecasts average CPO pricing to remain above RM4,000/MT for the year, with Indonesian biofuel mandates and global oil price trends supporting higher prices. The Group will focus on increasing operational efficiency and cost rationalization to mitigate risks.

Potential Price-Sensitive Issues for Investors

• Litigation in Sarawak: The outcome of the NCR land dispute could materially affect the Group’s asset base and future profitability.
• Plantation Performance: Sustained high CPO prices and improved production volumes have significantly boosted profits, but any reversal in commodity prices or production due to climatic events could affect results.
• Capital Actions: Ongoing warrant exercises and share buybacks may affect share dilution and liquidity.
• Property Segment Weakness: Continued losses in property and other operations may offset plantation gains if not addressed.

Conclusion

Harn Len Corporation Bhd. has delivered robust results for the third quarter of FY2026, driven by strong plantation performance and prudent financial management. The ongoing NCR litigation and the company’s capital actions, alongside commodity price movements and operational risks, remain key factors that could influence the share price going forward.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. The information herein is based on unaudited interim financial statements and is subject to change.

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