HHRG Reports Wider Losses for Q2 2026 Amid Strategic Subsidiary Disposal and Market Headwinds

Key Points from the Interim Financial Report for the Second Quarter Ended 31 March 2026

HHRG Berhad has released its unaudited interim financial results for the second quarter and cumulative six-month period ended 31 March 2026. The Group faced significant challenges, reflected in a sharp decline in revenue and a much wider loss before tax, primarily due to a one-off loss from the disposal of a loss-making subsidiary and weaker performance in its furniture division.

Financial Performance Highlights

• Revenue: Fell sharply by 26.76% year-on-year to RM20.39 million for the quarter, and by 21.97% to RM47.46 million for the half-year.
• Loss Before Tax: The Group posted a loss before tax of RM9.08 million for Q2 2026 (compared to a loss of RM1.69 million in Q2 2025) and a cumulative loss before tax of RM6.44 million (versus a profit of RM1.33 million in the prior year period).
• Total Comprehensive Loss: RM9.65 million for the quarter, and RM7.57 million for the six months, with losses attributable to owners at RM9.1 million and RM6.56 million, respectively.
• Basic Earnings Per Share: -0.87 sen for the quarter and -0.60 sen for the half-year.
• Net Assets Per Share: Declined from RM0.27 to RM0.25.

Major Price-Sensitive Developments

• One-Off Loss from Subsidiary Disposal: The Group recorded a significant one-off loss of approximately RM7.7 million due to the disposal of 100% equity in Fibre Star (M) Sdn Bhd (“FSM”), a subsidiary engaged in mattress manufacturing. FSM had been loss-making for the past three years and its disposal was part of a strategic rationalisation exercise to stem further losses. This event heavily impacted administrative expenses and overall profitability.
• Furniture Division Weakness: The furniture, mattresses, and related products division saw revenues drop due to the loss of contributions from FSM, softer export demand, a weaker USD, and shipment delays caused by the United States-Iran conflict. This division’s challenges are expected to persist due to ongoing geopolitical uncertainties.
• Biomass Division as Key Contributor: Despite overall weakness, the biomass materials and related products division remained profitable and continued to be the main operating profit driver, supported by firmer crude palm oil (CPO) prices amid global supply chain disruptions.
• Legal and Professional Expenses: Higher professional fees relating to ongoing legal matters also weighed on the Group’s results.
• Corporate Actions:
  • Bonus Issue of Warrants B: Completed in January 2026, with 424.78 million new Warrants B listed on Bursa Malaysia. The exercise price is RM0.045. This corporate exercise could lead to future dilution if warrants are exercised and is a key factor for current and prospective shareholders.
  • Termination of Joint Venture and Call Option: The previously announced joint venture and call option agreement in relation to a property development project in Kuala Terengganu was terminated in December 2025. The Group entered into amended sale and purchase agreements for the land acquisition instead, altering the earlier strategic direction.
• Litigation: The Group is involved in several ongoing material litigations, including claims for breach of contract, fraud, conspiracy, and disputes over director removals and management control. Some court decisions have been appealed and trial dates are set throughout 2026. These legal matters may impact the company’s reputation, management stability, and financials depending on outcomes.

Segment Performance

• Biomass Division: Continued profitability with revenue of RM14.32 million for the quarter, but slightly down year-on-year. This division benefited from strong CPO prices and is expected to remain a key revenue source.
• Furniture Division: Revenue dropped significantly due to the FSM disposal and external market challenges. The division reported an operating loss.
• Credit and Property Divisions: Both segments recorded operating losses, with the property division particularly affected by development project changes and associated costs.

Balance Sheet and Cash Flows

• Total Assets: RM321.18 million (little change from prior year-end).
• Shareholders’ Equity: RM211.64 million, with non-controlling interests at RM67.68 million.
• Borrowings: RM12.04 million, mainly in term loans and overdrafts.
• Cash and Cash Equivalents: RM8.80 million, down from RM11.22 million in the previous year, mainly due to net cash outflows from investing activities (notably property and plant investments).

Outlook and Guidance

• Management remains cautious but optimistic on the Group’s prospects, with expectations of continued strong CPO prices supporting the biomass division. However, the furniture division is likely to remain under pressure due to geopolitical tensions affecting exports and logistics.
• The Group will focus on operational resilience, cost management, and internal governance.
• No dividend declared for the reporting period.
• No profit forecast or guarantee has been issued.

Key Takeaways for Shareholders

• The disposal of FSM and associated one-off loss is a major event and has significantly affected short-term profitability. This rationalisation could, however, improve future profit quality if loss-making operations are stemmed.
• Ongoing material litigation and management disputes introduce uncertainty and potential risks to both operations and share price.
• The bonus issue of warrants introduces the possibility of future share dilution.
• The Group’s future performance will likely hinge on biomass division stability and any resolution to legal disputes.

Disclaimer

This article is prepared for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors are advised to review the full financial report and consult their own professional advisors before making any investment decisions. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Laporan Kewangan Suku Kedua 2026 HHRG: Sorotan Utama dan Analisis untuk Pelabur

Poin Penting dari Laporan Kewangan Interim bagi Suku Kedua Berakhir 31 Mac 2026

HHRG Berhad telah mengumumkan keputusan kewangan tidak diaudit untuk suku kedua dan tempoh enam bulan berakhir 31 Mac 2026. Kumpulan menghadapi cabaran besar, dicerminkan oleh kejatuhan ketara dalam hasil dan kerugian sebelum cukai yang lebih besar, terutamanya akibat kerugian sekali sahaja daripada pelupusan subsidiari yang mengalami kerugian dan prestasi lemah dalam bahagian perabot.

Sorotan Prestasi Kewangan

• Hasil: Menurun sebanyak 26.76% tahun ke tahun kepada RM20.39 juta untuk suku tersebut, dan 21.97% kepada RM47.46 juta untuk tempoh enam bulan.
• Kerugian Sebelum Cukai: Kumpulan mencatat kerugian sebelum cukai sebanyak RM9.08 juta untuk S2 2026 (berbanding kerugian RM1.69 juta S2 2025) dan kerugian terkumpul RM6.44 juta (berbanding untung RM1.33 juta tahun sebelumnya).
• Jumlah Kerugian Komprehensif: RM9.65 juta untuk suku tersebut, dan RM7.57 juta untuk enam bulan, dengan kerugian kepada pemilik pada RM9.1 juta dan RM6.56 juta, masing-masing.
• Pendapatan Asas Sesaham: -0.87 sen untuk suku dan -0.60 sen untuk enam bulan.
• Aset Bersih Sesaham: Menurun daripada RM0.27 kepada RM0.25.

Perkara Penting dan Sensitif Harga

• Kerugian Sekali dari Pelupusan Subsidiari: Kerugian sekali sebanyak RM7.7 juta dicatatkan hasil pelupusan 100% ekuiti dalam Fibre Star (M) Sdn Bhd (“FSM”), subsidiari pembuatan tilam yang telah mengalami kerugian selama tiga tahun. Langkah ini diambil sebagai sebahagian daripada rasionalisasi strategik untuk menghentikan kerugian masa depan.
• Kelemahan Bahagian Perabot: Bahagian ini mengalami kejatuhan hasil akibat kehilangan sumbangan daripada FSM, permintaan eksport lemah, USD yang lemah, dan kelewatan penghantaran akibat konflik AS-Iran. Cabaran dijangka berterusan.
• Bahagian Biomass sebagai Penyumbang Utama: Bahagian ini kekal menguntungkan dan menjadi pemacu utama keuntungan operasi, disokong oleh harga minyak sawit mentah (CPO) yang kukuh.
• Perbelanjaan Undang-undang dan Profesional: Yuran profesional yang lebih tinggi berkaitan litigasi menjejaskan keputusan kumpulan.
• Tindakan Korporat:
  • Terbitan Bonus Waran B: Selesai pada Januari 2026, dengan 424.78 juta Waran B baharu disenaraikan di Bursa Malaysia. Harga pelaksanaan RM0.045. Ini berpotensi menyebabkan pencairan saham pada masa depan.
  • Penamatan Usahasama dan Opsyen: Usahasama dan opsyen yang diumumkan sebelum ini bagi projek pembangunan hartanah di Kuala Terengganu telah ditamatkan pada Disember 2025. Perjanjian jual beli tanah telah diubah.
• Litigasi: Kumpulan terlibat dalam beberapa litigasi penting yang sedang berjalan, termasuk dakwaan penipuan, konspirasi, dan pertikaian pengurusan. Keputusan mahkamah dan perbicaraan akan datang sepanjang tahun 2026. Ini mungkin menjejaskan reputasi, kestabilan pengurusan, dan kewangan syarikat.

Prestasi Segmen

• Bahagian Biomass: Kekal menguntungkan dengan hasil RM14.32 juta untuk suku, sedikit berkurangan dari tahun sebelumnya. Dijangka kekal sebagai penyumbang utama hasil.
• Bahagian Perabot: Hasil menjunam akibat pelupusan FSM dan cabaran pasaran. Melaporkan kerugian operasi.
• Bahagian Kredit & Hartanah: Kedua-duanya mencatatkan kerugian operasi, dengan bahagian hartanah terjejas akibat perubahan projek pembangunan.

Kedudukan Kewangan dan Aliran Tunai

• Jumlah Aset: RM321.18 juta (tiada perubahan ketara dari akhir tahun sebelumnya).
• Ekuiti Pemegang Saham: RM211.64 juta, kepentingan bukan kawalan RM67.68 juta.
• Peminjaman: RM12.04 juta, terutamanya pinjaman berjangka dan overdraf.
• Tunai dan Setara Tunai: RM8.80 juta, turun dari RM11.22 juta sebelumnya, disebabkan aliran keluar tunai untuk pelaburan harta dan loji.

Prospek dan Panduan

• Pengurusan kekal berhati-hati tetapi optimis terhadap prospek kumpulan, dengan jangkaan harga CPO terus kukuh menyokong bahagian biomass.
• Tiada dividen diisytiharkan untuk tempoh pelaporan.
• Tiada ramalan keuntungan dikeluarkan.

Perkara Utama untuk Pemegang Saham

• Pelupusan FSM dan kerugian sekali adalah peristiwa utama yang sangat menjejaskan keuntungan jangka pendek, tetapi boleh memperbaiki keuntungan masa depan jika operasi yang menyebabkan kerugian dihentikan.
• Litigasi dan pertikaian pengurusan yang berterusan membawa ketidakpastian dan risiko kepada operasi dan harga saham.
• Terbitan waran bonus boleh menyebabkan pencairan saham pada masa depan.
• Prestasi masa depan kumpulan sangat bergantung pada kestabilan bahagian biomass dan penyelesaian litigasi.

Penafian

Artikel ini disediakan untuk tujuan maklumat sahaja dan bukan merupakan nasihat pelaburan atau cadangan untuk membeli atau menjual mana-mana sekuriti. Pelabur dinasihatkan untuk meneliti laporan kewangan penuh dan berunding dengan penasihat profesional mereka sebelum membuat sebarang keputusan pelaburan. Segala kenyataan berwawasan ke hadapan tertakluk kepada risiko dan ketidakpastian yang boleh menyebabkan keputusan sebenar berbeza secara material.

View HHRG BERHAD Historical chart here