Latest / Investor Exchange / Hai Leck Holdings 3Q25 Interim Financial Statements

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Hai Leck Holdings 3Q25 Interim Financial Statements · Investor Exchange

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Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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Ever feel like you're only getting half the story with company news?
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You know, you see the headlines, maybe a quick quote, but the real insights.
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Well, they lie deeper. Today, we're doing exactly that, a deep dive into the
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financial health of Hylex Holdings. Right.
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We've got their condensed interim financial statements here for the third quarter
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and nine months ending March 31st, 2025.
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We're going to unpack what they really tell us about how the company is doing.
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Absolutely. And think of this as kind of your shortcut to understanding the
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core financial story here.
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We're looking at revenue, profitability, where their money is going.
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Nakia Grabenzis. Exactly.
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And importantly, what the company itself is saying about the future.
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We're not just reading numbers. We're trying to connect the dots,
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you know, across the income statement, balance sheets, cash flow, the notes.
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And there's that letter from Zandar Capital, too, right, about the acquisition.
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Yeah, that's a big one. We'll get to that. It has a lot of context.
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OK, let's jump right into the revenue picture then. So for the nine months leading
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up to March 31st, 2025, HILAC reported $40.7 million in revenue.
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Now, comparing that to the $43.1 million in the same period last year,
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well, we see a decrease. It's about 5.7 percent or $2.4 million down.
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What's the initial take on why? Well, what's interesting right away is the reason they give.
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It seems to be a dip in revenue specifically from their contact center services. OK.
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But if we zoom in just on the most recent quarter, the three months ending March 2025.
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The revenue there, roughly $11.6 million, is actually quite similar to the same quarter in 2024.
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Oh, interesting. So the nine-month trend is down, but the last quarter held
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steady, or something shifted. Exactly.
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It suggests something changed more recently. Maybe the project side picked up.
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That's a key point. Let's dig into that shift. We can look at the revenue broken
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down by their two main segments. Good idea.
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Okay, so for the nine months ending March 2025, Project and Maintenance Services
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brought in $32.261 million.
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That's almost exactly the same as the $32.274 million in 2024.
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Wow. Okay. So really stable there. Right. Which means the entire nine-month
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decrease really does seem to be concentrated in contact center services.
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That generated $8.426 million in the nine months this year, compared to $10.865 million last year.
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Hmm. Quite a drop in that segment then over the nine months.
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Yeah. Now looking at just the third quarter, project and maintenance services actually increased.
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It went up to $9.386 million from $8.334 million in Q3 last year.
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Ah, so there's the offset. Exactly.
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While contact center services declined in that quarter, too,
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down to $2.25 million from $3.381 million.
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So, yeah, it looks like the project side did pick up some slack in that last quarter.
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Right. And that highlights, you know, a potential dynamic within the company,
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one segment compensating for another, shows some operational flexibility, maybe.
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Good point. And it's worth remembering all this revenue, both segments,
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both timeframes, it's all coming from customers based in Singapore.
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Yeah. So very focused geographically right now.
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OK, moving on to profitability, then gross profit.
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For the nine months of 2025, it was $21.517 million, down from $24.317 million
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in 2024. That's an 11.5% decrease.
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And the third quarter alone shows a similar, actually slightly steeper drop,
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from $6.373 million last year to $5.257 million this year. It's a 17.5% decline.
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What's squeezing that gross profit? Well, as you might expect,
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it connects directly to the cost of sales.
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Okay. For the nine months ending March 2025, cost of sales edged up a bit to
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$19.2 million from $18.8 million the year before.
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Right, about $0.4 million increase, 1.8%. In the notes, they specify this was
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mainly higher cost for materials and subcontractors.
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Interestingly, they did see some relief from lower manpower expenses in cost
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of sales. Okay, so a mix of factors there. Exactly.
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But the increase in the third quarter's cost of sales was even more pronounced.
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It jumped to $6.4 million from $5.3 million in Q3 2024.
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That's nearly 20%. Wow. And again, driven by those higher material and subcontractor costs.
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Suggests maybe some pressure on their supply chain or project execution costs in that period.
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Okay, so the core cost of delivering their services seems to have ticked up, especially recently.
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Now, what about the other costs? You know, running the business operating expenses.
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Ah, here's where we see a potentially more positive story.
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For both the nine-month and three-month periods ending March 2025.
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Total operating expenses actually decreased. Oh, really? Yeah.
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Over the nine months, they fell significantly, down to $20.4 million from $25.2 million in 2024.
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That's a big drop. That is significant. Nearly $5 million.
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Right. And similarly, in the third
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quarter, operating expenses were $6.5 million, down from $7.3 million.
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And the key driver for these savings, according to the report,
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is lower manpower-related costs.
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So maybe efficiency gains or strategic cuts. Could be either or both.
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It certainly helped their bottom line. Let's break that down quickly.
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Where did those savings come from within operating expenses?
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For the nine months, let's see, distribution and selling expenses were $5.9
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million, down from $7.1 million.
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Administrative expenses were $10.9 million, down quite a bit from $13.8 million.
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Big drop there. And other expenses, which includes depreciation,
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were $3.6 million, down from $4.2 million.
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So yeah, like you said, looks like they managed to cut costs across the board in these areas.
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That shows a pretty comprehensive effort in cost management.
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Now let's look at other income.
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Sometimes this can give the results a bit of a boost. For the nine months of
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2025, this actually increased substantially.
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Went up to $2.5 million from $1.8 million in 2024.
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That's a jump of over 37%. What fueled that? Okay, the report points to a few things here.
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Larger gains from selling off property, plant, and equipment. Ah, asset sales. Yeah.
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Also increased income from government grants and higher interest earned on their
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bank deposits. So, a mix. Okay.
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But the third quarter tells a slightly different story.
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Other income actually decreased in Q3.
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It was $0.6 million compared to $7.61 million last year. Oh,
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why the decrease in the quarter?
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Mainly lower interest income, it seems. though that was partly offset by higher
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government grants in the quarter itself.
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So yeah, it looks like the nine-month figure was definitely helped by those
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potentially non-recurring gains from selling assets. That's an important nuance, yeah.
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While the overall increase is good, you always question the sustainability of
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gains from asset disposals, right? Right.
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It's the core operating performance that gives you the clearer picture long-term.
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Right. Okay. So let's get to the crucial part, the profit figures, profit before tax.
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For the third quarter of 2025, they actually reported a loss before tax,
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$0.351 million loss, whereas they had a profit of $0.372 million in the same quarter of 2024.
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That looks like a step back, doesn't it? Well, yes, that single quarter shows a swing to a loss.
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But interestingly, the company itself describes that change as not meaningful.
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Okay. And if we look at the bigger nine-month picture, the trend is quite different,
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very different, actually.
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And so. For the nine months ended March 2025, their profit before taxation soared,
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it hit $5.254 million compared to $2.567 million in 2024.
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That's an increase of over 104%. Wow.
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Okay, so a quarterly dip, but a massive nine-month jump.
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Exactly. It really underscores why you need to look at the longer-term performance,
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not just one quarter, which can get skewed by short-term things. Absolutely.
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That nine-month profit figure paints a much brighter picture.
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Now, what about tax? How much did they pay on that profit? Well,
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for the nine months of 2025, their tax expense was higher.
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It was $0.669 million compared to just $0.232 million in 2024.
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So the tax bill went up quite a bit more than the profit did,
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percentage-wise. Yeah, seems so.
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The notes explain that part of this is because the effective tax rate was higher
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due to some expenses not being tax deductible.
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Ah, okay. But we're just looking at the third quarter itself.
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The tax expense was actually lower in 2025, $0.088 million, compared to 2024,
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$0.062 million, which is odd given the pre-tax loss, maybe timing.
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Hmm, interesting. So despite the much higher profit over nine months,
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the increased tax burden, or maybe the timing of it, did take a bite,
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which brings us to the final profit figures, profit attributable to equity holders.
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Right. For the third quarter, mirroring the pre-tax figure, it was a loss.
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Sore a $0.263 million loss compared to a profit of $0.434 million in 2024.
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Again, labeled not meaningful. Okay. And the nine months. That's where the good news is.
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For the nine months ended March 2025, the profit attributable to equity holders
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saw that substantial jump we expected. It reached $4.585 million,
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up from $2.335 million in 2024.
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So almost double. Yeah, a 96.4% increase.
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And this positive trend, as you'd expect, is also reflected in the earnings
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per share. Right, so EPS.
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Basic and diluted earnings per share for the nine months both doubled.
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They went from 1.0 cent in 2024 to 2.0 cents in 2025.
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Okay. And while the third quarter saw that negative EPS figure,
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negative 0.1 cents versus 0.2 cents, The overall picture for the longer period,
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it clearly shows a significant improvement in profitability for HILAC's shareholders.
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So it really highlights how effective that cost management and the boost in
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other income were in offsetting that slight dip in overall revenue we started with. Exactly.
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It's a good example of how different parts of the financial picture interact.
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Okay, let's now turn our attention to their financial position, the balance sheet.
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What key insights can we draw from their assets and liabilities as of March 2025?
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Sure. On the asset side, let's look at non-current assets first.
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We saw a slight decrease from $40.5 million back at the end of June 2024 down
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to $40.1 million at the end of March 2025.
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Mostly depreciation. Primarily, yeah. The usual depreciation of assets.
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But it was partly offset by an increased investment in their joint venture. Which one is that?
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Logtai High Lake Engineering Co., LTD. It operates in the oil and gas and chemical industries.
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High LEC holds a pretty significant stake, about 44.66%. So its performance
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matters to the group. Right.
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Okay. And what about their more liquid assets, the current assets?
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Current assets saw a more noticeable increase.
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They rose from $84.1 million to $90.1 million between June 24 and March 25.
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Okay. What drove that increase? The main drivers were growth in cash and cash
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equivalent. Always good to see. Definitely.
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And also an increase in contract assets. This was partially balanced out by
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a decrease in trade receivables, though.
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How much did cash go up? Cash and cash equivalents increased by a healthy $5.7
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million, and that rise in contract assets.
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Oh, well, it could potentially be linked to that increased activity in their
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project and maintenance segment we talked about earlier. Makes sense.
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Okay, moving over to the other side of the balance sheet, liabilities.
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What's happening there?
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Current liabilities saw just a minor increase, up to $9.5 million as of March
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2025, from $9.1 million in June 2024, mainly due to a rise in income tax payable.
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Okay. And non-current, long-term debt. Non-current liabilities remained quite stable.
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They were around $5.4 million, mostly consisting of lease obligations.
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So overall, their liquidity position, looking at current assets versus current
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liabilities, seems pretty healthy.
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Good to know. Now let's follow the money, the cash flow statement.
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How has their cash generation and spending been over these nine months? Right.
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So net cash generated from operating activities actually decreased.
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It was $4.5 million in the first nine months of fiscal 25 compared to $7.1 million
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in the same period last year. Huh.
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That's interesting, given that their profit before tax actually increased substantially.
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Why the disconnect? Yeah, it is interesting. The report indicates this difference
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is due to changes in working capital.
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You know, things like receivables, payables, contract assets,
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liabilities, how quickly they collect payments versus pay suppliers, that kind of thing.
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The specifics aren't fully detailed here, but working capital changes absorbed some cash. OK.
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On a more positive note, cash flow from investing activities actually increased.
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It generated $1.9 million in these nine months versus $1.1 million in the prior year period.
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What was behind that increase? It was largely due to higher proceeds from selling
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property, plant, and equipment, those asset disposals we mentioned earlier.
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They brought in $1.152 million compared to just $0.52 million in the prior year.
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Got it. And finally, financing activities.
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Dividends. Net cash used in financing activities was significantly lower in these nine months.
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Only $0.647 million used compared to $5.268 million used in the same period
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last year. Big difference.
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Why so much lower? The primary reason is the absence of any dividend payments
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in the current period. Ah, right.
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The report explicitly states no dividends were declared. And it links this directly
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to the ongoing scheme of arrangement.
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Okay, we'll definitely come back to that scheme. So adding it all up,
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where did their cash balance end up?
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As a result of all these flows, their cash and cash equivalents at the end of March 2025 were higher.
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They stood at $73.6 million compared to $66.5 million a year earlier.
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So a strong liquidity position, as we suspected from the balance sheet.
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Yeah, that healthy cash balance certainly provides a buffer.
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Okay, let's move on to the outlook and any significant events mentioned.
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What insights do these documents offer about where the company might be heading?
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Well, the company's own commentary acknowledges, you know, the persistent global
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economic and political uncertainties.
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They specifically flag the potential impact of U.S.
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Tariffs on the Singaporean economy, although they note that specific effects
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on their industries aren't yet clear.
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They also highlight the sensitivity of the oil and gas sector,
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which is key for their joint venture to strategic decisions by major market players.
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So some caution there. Definitely.
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And in this competitive landscape, their stated strategy is to keep focusing
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on prudent operational management and cost control, which fits with the cost
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reductions we saw earlier.
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Makes sense. The report also explicitly addresses dividends again in the outlook
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section, right? Yes, exactly.
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As we saw reflected in the cash flow, it confirms no dividend was recommended
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or declared for the current financial period.
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And none was declared for the corresponding period last year either.
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And the reason given again is? The scheme of arrangement.
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Announced back on December 9th, 2024.
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Okay, so this scheme of arrangement seems to be the really pivotal event hanging
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over everything right now. It really does.
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The financial statements detail the proposed acquisition.
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It's by a company called Chang Investment Management, LTD.
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And they're proposing to acquire all of Heilic Holdings' issued ordinary shares,
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except certain excluded shares, through this scheme.
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The initial announcement, as we said, was December 9th. And that Xandar Capital
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letter we mentioned at the start. Yeah, that's appended to the financials.
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Xandar Capital prepared it according to Singapore's takeover code,
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offering their independent financial advice or opinion on this proposed acquisition.
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Its inclusion signals this is a very serious ongoing process.
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So this potential acquisition really overshadows a lot of the current financial
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performance discussion, doesn't it? It provides crucial context.
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It absolutely does. decisions like holding back on dividends are directly linked to this.
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And, you know, the financial performance, we've just analyzed the profitability,
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the cash position that likely plays a big role in the valuation and the overall
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context for this acquisition.
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Okay. So to bring it all together then, our deep dive into Heilig Holdings Financials
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for the first nine months of fiscal 2025.
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Well, it reveals a pretty nuanced picture. We saw that slight dip in overall
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revenue, mostly from contact center services.
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However, they achieved a really notable increase in profitability.
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Right, driven by that effect of cost management, plus a boost from other income,
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though some of that might be non-recurring, like the asset sales.
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And they also boast a strong cash position.
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But looming over all of this is that major proposed acquisition,
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which is clearly influencing their current decisions and future outlook.
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Looking beyond just the surface numbers, You see a company that's been actively
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managing its expenses becoming more profitable despite a small revenue contraction.
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And those strong cash reserves give them financial flexibility,
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especially with this acquisition process underway.
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Understanding these details gives you, the listener, a much clearer picture
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than just reading a headline about revenue being down.
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So hopefully this deep dive has provided you with a more comprehensive understanding
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of HILAC's recent financial performance. It really highlights why it's important
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to look at multiple statements, understand the reasons behind the numbers,
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and consider these big events like the acquisition.
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Yeah, and this raises a crucial question for you to think about.
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How might this proposed acquisition ultimately impact HILAC's operations and strategy?
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Will the new owners leverage the existing strengths, or will they steer the
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company in a totally new direction?
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And what could that mean for the industries HILAC operates in? Exactly.
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It's definitely something to keep an eye on as this acquisition progresses.
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It adds a whole other layer to analyzing the company.
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Absolutely. And of course, for those of you who want to delve even deeper,
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the full financial statements and that Xanar Capital letter offer a lot more detail.
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But for now, we hope this deep dive has been a valuable shortcut to understanding
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the key financial developments at Highlight Holdings.