HHRG Berhad – Q2 2026 Interim Financial Results: In-depth Investor Analysis

Executive Summary & Key Highlights

• Revenue dropped sharply by 26.8% YoY to RM20.39 million for the quarter and by 22% YoY to RM47.46 million for 1H FY2026.
• Group reported a substantial loss before tax (LBT) of RM9.08 million for Q2 2026 (vs. LBT of RM1.69 million in Q2 2025) and RM6.44 million for 1H FY2026 (vs. profit before tax of RM1.33 million in 1H FY2025).
• Major one-off loss of RM7.7 million due to the disposal of loss-making subsidiary Fibre Star (M) Sdn Bhd (“FSM”) in mattress manufacturing (furniture division).
• Segmental performance: Biomass division remains profitable and is the key earnings contributor. Furniture division saw significant revenue and profit decline.
• Market & operational headwinds: Softer export demand, USD weakness, shipping delays due to Middle East tensions, and higher professional fees for ongoing legal matters.
• Ongoing litigation: Multiple material lawsuits involving directors, subsidiaries, shareholders, and third parties, with several claims for damages, share transfers, and injunctions.
• Corporate actions: Completion of Bonus Issue of Warrants B in January 2026 and termination of a Kuala Terengganu property development joint venture.

Detailed Financial and Operational Review

1. Financial Performance and Price-Sensitive Developments

• Revenue and Profitability:
  • Q2 2026 revenue: RM20.39m (-26.8% YoY)
  • 1H 2026 revenue: RM47.46m (-22% YoY)
  • Q2 2026 LBT: RM9.08m (vs. LBT of RM1.69m YoY)
  • 1H 2026 LBT: RM6.44m (vs. PBT RM1.33m YoY)
  • Higher administrative expenses due to RM7.7m loss on disposal of FSM, a major subsidiary in the furniture division. This is a one-off but highly material event impacting profit and shareholders’ equity.
  • EPS (sen): Basic -0.87 (Q2), -0.60 (1H); Diluted -0.70 (Q2), -0.49 (1H)
• Segment Performance:
  • Biomass Division: Remains profitable; revenue RM14.32m (Q2), RM34.64m (1H). Supported by strong crude palm oil (CPO) prices due to global geopolitical tensions.
  • Furniture Division: Revenue down sharply after disposal of FSM (no mattress sales), soft demand, USD depreciation, shipping disruptions. This division went from profit to loss YoY.
  • Credit Division: Revenue and profit declined due to higher provisions and weaker loan demand.
  • Property Division: Marginal revenue, segment remains loss making.
• Cash Flow and Financial Position:
  • Net cash from operations: RM0.26m (1H 2026) vs RM24.7m (1H 2025). Major decline due to lower profitability, higher working capital needs.
  • Net cash used in investing: RM10.11m (mainly due to property acquisitions and investment activities, offset by disposal of a subsidiary).
  • Net cash from financing: RM2.8m (warrants/SIS exercised, offset by repayments).
  • Net assets per share: RM0.25 (down from RM0.27 at FY2025).
  • Borrowings relatively stable: RM12.04m, all in RM, no foreign currency risk.
• Dividend: No dividend declared or paid for the quarter.

2. Strategic and Price-Sensitive Corporate Actions

• Disposal of FSM (Mattress Manufacturing):
  • 100% stake disposed as part of strategic rationalisation due to 3 years of losses.
  • One-off disposal loss of RM7.7m. Material and price sensitive as it directly impacts future earnings and asset base.
• Bonus Issue of Warrants B:
  • Entitlement and listing completed in Jan 2026. 424.8m new Warrants B listed at RM0.045 exercise price.
  • Potential future dilution if warrants are exercised, but no immediate cash inflow unless exercised.
• Terminated Joint Venture & Land Acquisition:
  • Termination of Kuala Terengganu property JV and call option; land acquisition proceeds via amended SPA.
  • May affect long-term property development pipeline and growth prospects.

3. Legal Matters – Material Litigations

• Several ongoing material litigations with potential financial and reputational impact:
  • Penang High Court Suit (PA-22NCvC-58-04/2024): Claims of fraud, breach of contract, and compensation for shares/warrants transferred or to be transferred. Trial in October 2026.
  • Penang High Court Suit (PA-22NCvC-111-07/2024): Allegations of fraudulent inducement in MGF shares acquisition, with recent applications for expungement of privileged documents. Trial set for November 2026.
  • Shah Alam High Court Suit (BA-22NCC-54-03/2025): Challenging EGM requisition by major shareholder; management alleges abuse of power.
  • Shah Alam High Court Suit (BA-22NCC-102-06/2025): HHRG Capital pursuing RM1.5m loan recovery; summary judgment obtained, now in enforcement.
  • Shah Alam High Court Suit (BA-22NCvC-408-09/2025): HHRG and subsidiaries suing former CEO for breach of duty and seeking damages.

  All these cases could have material financial and/or reputational implications depending on outcomes.

4. Outlook and Guidance

• Biomass Division: Expected to remain resilient with continued strong CPO prices amid global geopolitical tensions. Management is cautiously optimistic but notes commodity price volatility and supply chain risks.
• Furniture Division: Outlook remains challenging due to weak export demand, currency headwinds, and shipping disruptions from Middle East conflicts.
• Cost control and governance: Board and management to focus on cost discipline and governance in the face of operational and legal headwinds.
• No profit forecast or guarantee issued.

Potential Share Price Impact & Investor Considerations

• The one-off RM7.7 million disposal loss, ongoing legal suits (including claims of fraud, compensation for shares and warrants, and directorial disputes), and weak Q2 results are likely to be price sensitive and may exert downward pressure on the share price in the near term.
• Completion of the Bonus Issue of Warrants B provides potential for future equity dilution and may impact share price dynamics based on warrant conversion activity.
• Termination of a property JV may affect medium-term growth prospects in the property division.
• Resilient performance in the Biomass Division is a key positive, but is not sufficient to offset group-wide losses and legal uncertainties at this time.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult their professional advisors before making any investment decisions. The company’s actual performance may differ materially from expectations due to risks including but not limited to litigation outcomes, operational challenges, market volatility, and macroeconomic factors.

Versi Bahasa Malaysia

HHRG Berhad – Keputusan Kewangan Suku Kedua 2026: Analisis Mendalam untuk Pelabur

Ringkasan Eksekutif & Sorotan Utama

• Hasil jatuh ketara sebanyak 26.8% tahun ke tahun kepada RM20.39 juta untuk suku ini dan 22% kepada RM47.46 juta untuk separuh pertama FY2026.
• Kumpulan mencatat kerugian sebelum cukai (LBT) sebanyak RM9.08 juta untuk S2 2026 (berbanding LBT RM1.69 juta S2 2025) dan RM6.44 juta untuk 1H FY2026 (berbanding untung sebelum cukai RM1.33 juta 1H FY2025).
• Kerugian sekali sahaja sebanyak RM7.7 juta akibat pelupusan anak syarikat bermasalah, Fibre Star (M) Sdn Bhd (“FSM”) dalam pembuatan tilam (divisyen perabot).
• Prestasi segmen: Divisyen Biomass kekal untung dan penyumbang utama. Divisyen Perabot alami penurunan hasil dan keuntungan yang ketara.
• Halangan pasaran & operasi: Permintaan eksport lembap, penyusutan USD, kelewatan penghantaran akibat konflik Timur Tengah, dan peningkatan yuran guaman.
• Tindakan undang-undang berterusan: Beberapa litigasi material melibatkan pengarah, anak syarikat, pemegang saham dan pihak ketiga, dengan tuntutan pampasan, pemindahan saham dan injunksi.
• Tindakan korporat: Penyelesaian Bonus Isu Waran B pada Januari 2026 dan pembatalan usaha sama pembangunan hartanah di Kuala Terengganu.

Ulasan Kewangan dan Operasi Terperinci

1. Prestasi Kewangan dan Perkara Sensitif Harga

• Hasil dan Keuntungan:
  • Hasil S2 2026: RM20.39j (-26.8% YoY)
  • Hasil 1H 2026: RM47.46j (-22% YoY)
  • LBT S2 2026: RM9.08j (berbanding LBT RM1.69j YoY)
  • LBT 1H 2026: RM6.44j (berbanding untung sebelum cukai RM1.33j YoY)
  • Perbelanjaan pentadbiran meningkat akibat kerugian sekali RM7.7j pelupusan FSM. Ini sangat material dan memberi impak terus kepada keuntungan dan ekuiti pemegang saham.
  • EPS (sen): Asas -0.87 (S2), -0.60 (1H); Dicair -0.70 (S2), -0.49 (1H)
• Prestasi Segmen:
  • Divisyen Biomass: Kekal untung; hasil RM14.32j (S2), RM34.64j (1H). Disokong harga CPO kukuh disebabkan ketegangan geopolitik global.
  • Divisyen Perabot: Hasil jatuh mendadak selepas pelupusan FSM (tiada jualan tilam), permintaan lemah, penyusutan USD, gangguan logistik. Dari untung ke rugi YoY.
  • Divisyen Kredit: Hasil dan untung menurun kerana peruntukan lebih tinggi dan permintaan pinjaman lemah.
  • Divisyen Hartanah: Hasil marginal, segmen kekal rugi.
• Aliran Tunai & Kedudukan Kewangan:
  • Aliran tunai operasi bersih: RM0.26j (1H 2026) vs RM24.7j (1H 2025). Jatuh ketara akibat keuntungan lebih rendah, keperluan modal kerja tinggi.
  • Aliran tunai pelaburan bersih: RM10.11j (utama kerana pembelian hartanah & pelaburan, diimbangi pelupusan anak syarikat).
  • Aliran tunai pembiayaan bersih: RM2.8j (warran/SIS dilaksanakan, diimbangi pembayaran balik).
  • Aset bersih sesaham: RM0.25 (turun dari RM0.27 pada FY2025).
  • Pinjaman stabil: RM12.04j, semuanya dalam RM, tiada risiko mata wang asing.
• Dividen: Tiada dividen diumumkan atau dibayar untuk suku ini.

2. Tindakan Korporat Strategik dan Sensitif Harga

• Pelupusan FSM (Pembuatan Tilam):
  • 100% pegangan dilupus sebagai sebahagian rasionalisasi strategik akibat kerugian 3 tahun berturut.
  • Kerugian sekali sebanyak RM7.7j. Sangat material dan sensitif harga kerana impak terus kepada pendapatan masa depan dan asas aset.
• Bonus Isu Waran B:
  • Tarikh kelayakan & penyenaraian selesai Jan 2026. 424.8j Waran B baharu disenaraikan pada harga pelaksanaan RM0.045.
  • Berpotensi pencairan ekuiti masa depan jika waran dilaksanakan, tiada tunai masuk serta-merta melainkan dilaksanakan.
• Pembatalan JV & Pembelian Tanah:
  • Pembatalan JV hartanah Kuala Terengganu & opsyen panggilan; pembelian tanah diteruskan melalui SPA dipinda.
  • Boleh memberi kesan kepada prospek pertumbuhan segmen hartanah jangka sederhana.

3. Perkara Guaman – Litigasi Material

• Beberapa litigasi material sedang berjalan yang boleh memberi impak kewangan dan reputasi:
  • Saman Mahkamah Tinggi Pulau Pinang (PA-22NCvC-58-04/2024): Tuntutan penipuan, pelanggaran kontrak, pampasan saham/waran. Perbicaraan Okt 2026.
  • Saman Mahkamah Tinggi Pulau Pinang (PA-22NCvC-111-07/2024): Dakwaan penipuan dalam pengambilalihan saham MGF, permohonan pengguguran dokumen. Perbicaraan Nov 2026.
  • Saman Mahkamah Tinggi Shah Alam (BA-22NCC-54-03/2025): Mencabar permintaan EGM oleh pemegang saham utama; pengurusan dakwa penyalahgunaan kuasa.
  • Saman Mahkamah Tinggi Shah Alam (BA-22NCC-102-06/2025): HHRG Capital menuntut semula pinjaman RM1.5j; penghakiman ringkas diperoleh, kini dalam proses penguatkuasaan.
  • Saman Mahkamah Tinggi Shah Alam (BA-22NCvC-408-09/2025): HHRG & anak syarikat saman bekas CEO atas pelanggaran tugas, tuntut ganti rugi.

  Semua kes ini boleh memberi impak kewangan dan/atau reputasi bergantung kepada hasilnya.

4. Prospek dan Panduan

• Divisyen Biomass: Dijangka kekal kukuh dengan harga CPO yang stabil di tengah ketegangan geopolitik global. Pengurusan optimis secara berhati-hati namun mengakui risiko turun naik harga komoditi dan rantaian bekalan.
• Divisyen Perabot: Prospek kekal mencabar akibat permintaan eksport lemah, risiko mata wang dan gangguan penghantaran dari konflik Timur Tengah.
• Pengurusan kos dan tadbir urus: Lembaga dan pengurusan akan terus menumpu kepada disiplin kos dan pengukuhan tadbir urus dalam menghadapi cabaran operasi dan guaman.
• Tiada unjuran atau jaminan keuntungan dikeluarkan.

Impak Potensi Kepada Harga Saham & Pertimbangan Pelabur

• Kerugian sekali RM7.7j, litigasi berterusan (termasuk dakwaan penipuan, pampasan saham/waran, pertikaian pengarah) dan keputusan kewangan S2 yang lemah dijangka sensitif harga dan berpotensi memberi tekanan kepada harga saham dalam masa terdekat.
• Penyelesaian Bonus Isu Waran B memberi potensi pencairan ekuiti masa depan dan boleh mempengaruhi dinamik harga saham bergantung kepada aktiviti pelaksanaan waran.
• Pembatalan JV hartanah boleh menjejaskan prospek pertumbuhan segmen hartanah jangka sederhana.
• Prestasi kukuh Divisyen Biomass adalah positif, namun tidak mencukupi untuk mengimbangi kerugian kumpulan dan ketidaktentuan undang-undang masa ini.

Penafian

Artikel ini adalah untuk tujuan maklumat sahaja dan bukan nasihat pelaburan. Pelabur digalakkan membuat penilaian sendiri dan mendapatkan nasihat profesional sebelum membuat sebarang keputusan pelaburan. Prestasi sebenar syarikat mungkin berbeza dengan jangkaan akibat risiko termasuk tetapi tidak terhad kepada hasil litigasi, cabaran operasi, turun naik pasaran dan faktor makroekonomi.

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