Hong Lai Huat Group Limited (SGX: P18) FY2025 Financial Analysis

Hong Lai Huat Group Limited, a Singapore Mainboard-listed property developer and marble mining operator, has released its unaudited financial results for the year ended 31 December 2025. The group reported a notable turnaround in profitability, supported by improved operations, asset reallocation, and stable recurring income streams.

Key Financial Metrics and Year-over-Year Comparison

Historical Performance Trends

• Revenue: Surged from S\$0.10 million in FY2024 to S\$2.78 million in FY2025, mainly due to higher sales of marble blocks, property sales and increased rental income.
• Profitability: The group reversed a significant net loss in FY2024 (S\$12.93 million) to a net profit of S\$14.67 million, due largely to a S\$16.90 million gain from reclassifying development properties to investment properties, higher gross profit, lower asset write-downs, and the absence of discontinued operations’ losses.
• EPS and NAV: Both improved in tandem with profitability, with EPS turning positive and NAV per share rising to 22.37 cents.
• Cash Position: Despite operating cash outflows, the group remains well-capitalised with S\$21.57 million in cash and negligible borrowings.

Exceptional Items and Asset Revaluation

• Exceptional gain of S\$16.90 million arose from the transfer of development properties to investment properties, a key driver of the strong bottom-line performance.
• Write-downs on freehold development land were S\$1.44 million, significantly lower than the prior year.
• There were no losses from discontinued operations in FY2025, compared to S\$5.29 million in FY2024.

Share Buybacks and Capital Management

• The company repurchased and cancelled a total of 7,846,600 shares during and after FY2025, reducing the share base to 509,997,514 shares. This is supportive of EPS and shareholder value.

Operations and Strategic Developments

• Marble Mining: Output increased to 30% capacity in FY2025. The group expects further production and sales ramp-up in FY2026 as operations stabilise and expand.
• Property Portfolio: The completed D’Seaview project in Sihanoukville continues to provide stable rental income. Unsold units are held as long-term investment properties for future disposal at favourable prices.
• Joint Venture: Share of profit from the Phnom Penh Royal Platinum JV declined due to lower unit sales but remains a significant income contributor.
• Singapore Market: The group is actively evaluating new opportunities domestically, which may diversify earnings going forward.

Chairman’s Statement

“FY2025 reflects the Group’s continued efforts to strengthen operational performance and manage its asset base prudently. During the year, the Group achieved improved revenue and gross profitability, supported by sales of completed properties, stable rental contributions, and recorded a net profit, supported by gains from the transfer of certain development properties to investment properties.
Looking ahead, in light of challenging economic and evolving market conditions, the Group remains focused on carefully navigating the environment, maintaining operational efficiency, and gradually unlocking long-term value from its existing projects, underpinned by a healthy cash position and minimal gearing.” – Mr. Dylan Ong Jia Jing, Executive Director and Chief Strategy Officer

The tone is cautiously optimistic, highlighting operational improvements while acknowledging a challenging macroeconomic environment. The emphasis is on prudence, efficiency, and gradual value creation.

Divestments, Asset Sales, and Other Corporate Actions

• The group completed the disposal of its Cambodian agricultural project for S\$50 million in FY2024, allowing a full pivot to property and marble operations.
• There were no fundraisings, IPOs, or major related-party transactions reported in FY2025.

Cash Flow and Financial Position

• Operating cash outflow decreased to S\$3.63 million from S\$5.16 million, due to higher operating inflows from increased sales. Cash and cash equivalents at year-end stood at S\$21.57 million.
• Net cash used in financing activities (S\$1.77 million) was mainly for loan repayments and share buybacks. The company remains largely ungeared except for minor hire-purchase arrangements.

Outlook and Forward-Looking Statements

• The group expects further scaling of marble mining operations and continued monetisation of completed property units in FY2026.
• It is also evaluating potential investments in the Singapore market, which could diversify the revenue base.

Conclusion and Investment Recommendation

Overall, Hong Lai Huat Group delivered a strong financial rebound in FY2025, underpinned by asset revaluation gains, improved operational execution, and prudent capital management. The company’s robust cash position and minimal gearing provide a solid foundation for navigating future uncertainties.

• If you are currently holding the stock: Consider holding your position. The company’s financial turnaround, ongoing share buybacks, strong balance sheet, and operational momentum (especially in marble mining) support a positive outlook. However, monitor progress on Singapore market entry and further marble mine ramp-up, as execution risk remains in a challenging macroeconomic climate.
• If you are not holding the stock: This may be an opportune time to initiate a position, especially for investors seeking exposure to a turnaround story with an asset-backed balance sheet and optionality from new projects. However, patience is required as the group’s earnings are still partly reliant on asset revaluation and the property market remains cyclical. Consider accumulating on price weakness.

Disclaimer: This analysis is strictly informational and based solely on the company’s unaudited FY2025 financial report. It does not constitute investment advice. Please consult with your financial advisor and consider your own risk profile before making investment decisions.

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