HB Global Ltd’s profitability momentum continues to accelerate further after its turnaround in the previous quarter is ‘turbo-boosted’ by its highly successful internal restructuring efforts.
The group returned to the black with a net profit of RM5.85 mil in its 2Q FY2021 ended June 30, 2021 from a net loss of RM1.9 mil in the corresponding period of last year.
This is HB Global’s strongest quarterly net profit since 4Q FY2017. Revenue-wise, the group posted an increase of 58.6% to RM22.1 mil from RM13.05 mil a year ago.
A Bursa Malaysia filing shows that revenue surge was mainly contributed by global and local demand amid an improvement in the COVID-19 pandemic outlook as well as the relaxation of cross-border controls by more countries.
In this regard, HB Global has seen a sharp recovery in revenue for both of its ready-to-serve food and frozen vegetable business segments.
“While 2Q FY2021’s bottom line was mainly contributed by the internal restructuring and a leaner cost structure, we expect to see strong operational income from our newly acquired Forward Resources & Construction Sdn Bhd (FRC) moving forward,” commented HB Global’s executive director Lee Ping Wei.
Following completion of its 60% acquisition of FRC in July 2021, the group can now access FRC’s RM1.5 bil order book for the development of 5G infrastructure and solutions projects.
Among others. HB Global is able to tap into FRC’s key strength in the construction of telco infrastructure and its expertise of laying fibre optics using robotic services. With robots, it will be more efficient to lay cables via the sewerage system.
Given that the fibre optic cable business has gained momentum with the Government’s push for the roll-out of commercial 5G services by the end of this year, Lee is confident that this will put HB Global in a strong position to secure some of the 5G-related contracts that will be awarded.
On July 1, Digital Nasional Bhd which is the government-owned entity set up to build, own and operate Malaysia’s 5G network said it has awarded Erisson Malaysia with a RM11 bil contract to rollout the 5G network in Malaysia.
“Our immediate focus now is to work with FRC’s management team to execute the order book on hand,” he pointed out.
“On a yearly basis, the group is optimistic of achieving a top line contribution of RM200 mil to RM300 mil with an average gross profit margin of 30%. This spells an earnings visibility of five years based on the RM1.5 bil order book on hand.”
In early August 2021, FRC secured a full turnkey fibre implementation work contract from On Site Services Sdn Bhd which is a wholly owned subsidiary of Axiata Group Bhd.
At 9.47am, HB Global was unchanged at 35 sen with 2.38 million shares traded, thus valuing the company at RM270 mil.– Aug 17, 2021
