HB Global’s turnaround plan takes off with solid earnings in 1QFY2021

HB GLOBAL Ltd’s turnaround plan is bearing fruit as the gourmet convenient food producer that specialises in frozen vegetable and ready-to-serve duck meat products, returned to the black with a net profit of RM4.26 mil for its 1Q FY2021 ended March 31, 2021 from a net loss of RM6.52 mil in the same period a year ago.

The group’s turnaround plan is taking shape after the revamp of our internal supply chain system with digital innovation, according to its executive director Lee Ping Wei.

“The stellar earnings during the 1Q FY2021 reflects the potential of our supply chain management services which optimise the supply chain management process with our proprietary-artificial intelligence (AI) algorithm solutions,” he pointed out

In a filing with Bursa Malaysia, the group said its turnaround in profitability was mainly due to higher other operating income as well as lower general and administrative expense, and reduced other operating expenses.

HB Global’s revenue for the quarter rose by 81.8% year-on-year to RM16 mil in 1Q FY2021 from RM8.8 mil in 1Q FY2020 led by improvement in all business segments.

According to Lee, HB Global’s medium-term prospects are buoyed by a leaner cost structure and a more agile management style to navigate through uncertainties amid the pandemic.

“Over the past three months, we have seen a pickup in demand for our products as seen by the increase in our revenue,” he observed.

“However, we have also witnessed a resurgence of COVID-19 cases recently which disrupt some of our business operations and demand. Given the uncertainties posed by the lingering pandemic effect, we have taken proactive measures to restructure the company by reducing our cost structure.”

Lee further noted that the group’s venture into the supply chain business management is also starting to gain momentum as seen by the inquiries and orders from our prospective clients.

“There have been a lot of inquiries regarding the supply chain management services that we’re offering. A lot of our clients are talking to us as supply chain management has become so important following the COVID-19 pandemic,” he enthused.

“The ability to manage inventory, especially for fresh food like ours, is one of the keys that has helped us to turn profitable during the quarter, and we believe that we could add values for our clients on this front as well.”

Aside from that, the group’s transformation includes the venture into a high growth sector such as the layering of fibre optic cables using robotic services.

On April 1, HB Global announced that it planned to acquire a 60%-stake in Forward Resources & Construction Sdn Bhd – whose key strength in the building of telco infrastructure and its own expertise to lay fibre optics using robotic services – for RM66 mil.

Given the fibre optic cable business has gained momentum with the Government’s push for the roll-out of commercial 5G services by this year-end, Lee is confident that HB Global in a strong position to secure some of these contracts with the telco players.

At the close of this morning’s trading session, HB Global was up 1 sen or 3.64% to 28.5 sen with 19.93 million shares traded, thus valuing the company at RM135 mil. – May 27, 2021

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