Navigating Through Troubled Waters: Annual Report 2024 of Hai Leck Holdings Limited

Key Facts from the Report:

1. Company Overview:

   • Hai Leck Holdings Limited is a key player in the oil, gas, and petrochemical industries, providing project and maintenance services.
   • The company operates in Singapore and Thailand, with around 2,000 employees.

2. Financial Year:

   • The report covers the financial year ending June 30, 2024 (FY2024).

3. Revenue and Profitability:

   • FY2024 revenue dropped by 20.8%, from $68.6 million in FY2023 to $54.3 million, largely due to decreased revenue from both project/maintenance and contact center services.
   • The company reported a net loss of $0.1 million in FY2024, a steep decline from a net profit of $4.3 million in FY2023.
   • Cost of sales fell by 22.8%, and operating expenses reduced from $38.5 million in FY2023 to $32.1 million, mainly due to lower manpower-related costs.

4. Cash Position:

   • Despite the loss, Hai Leck maintained a strong cash position, with $67.9 million in cash and cash equivalents as of June 30, 2024, compared to $63.6 million the previous year.

5. Dividends:

   • The company did not declare any dividends for FY2024, citing the uncertain global and local economic outlook and the Group’s financial performance.

6. Challenges:

   • The Group faced macroeconomic uncertainties, increased competition, high inflation, rising manpower costs, and unpredictable weather conditions affecting outdoor operations.

7. Strategic Activities to Improve Profitability:

   • The Group took a cautious approach, focusing on cost management and diversification of its customer base to mitigate risks.
   • Accepted a 30-year lease extension for its workshop and dormitory premises to support long-term operations.
   • Continuous emphasis on workplace safety and maintaining a strong safety track record with numerous awards.

Investor Actions:

• For Investors Holding the Stock:

  • Given the company’s stable cash position but weak profitability, it is advisable to hold the stock if you are an investor looking for long-term growth and stability. The company is taking measured steps in cost control and operations to navigate challenging market conditions. However, the lack of dividends and profitability might be a concern in the short term.

• For Investors Not Holding the Stock:

  • If not currently holding the stock, it is advisable to wait for clearer signs of recovery in profitability before investing. The company’s revenue drop and net loss suggest challenges in the short term. However, its strong cash position and strategic cost management could offer a more attractive investment opportunity in the future.

Special Considerations for Investors:

• The lack of dividends may deter income-focused investors, while the company’s resilience in maintaining cash reserves may appeal to those seeking long-term value in a volatile industry.

Disclaimer:

• The above recommendations are based on the company’s current financial standing and market conditions as presented in the report. Investors should perform their own due diligence and consult a financial advisor before making any investment decisions.