Exchange: HKSE | Sector: Industrials | Industry: Manufacturing Metal Fabrication
Q2 2025
Published: Jun 30, 2025
Earnings Highlights
Revenue of $362.48M up 72.3% year-over-year
EPS of $0.00 increased by 20% from previous year
Gross margin of 8.5%
Net income of 4.24M
"N/A" - N/A
Heng Hup Holdings Limited (1891.HK) QQ2 2025 Earnings Analysis: Revenue Stabilization with Modest Margin Expansion in Metal Fabrication and Scrap Processing
Executive Summary
Heng Hup Holdings reported QQ2 2025 results with Revenue of MYR 362.48 million and Net Income of MYR 4.24 million, illustrating a modest uptick in profitability against a backdrop of stable top-line performance. We highlight a solid gross margin of 8.52% (gross profit MYR 30.87 million) and an operating margin of 2.01%, underpinned by disciplined cost management and a lean operating structure. EBITDA stood at MYR 9.32 million, and net income rose about 20.95% year over year, signaling improved operating efficiency even as the company continues to navigate macro volatility in the scrap metal market.
Net Income: 4,235,500; Net Margin: 1.17%; YoY: 20.95%
Financial Highlights
Performance highlights (MYR, unless noted):
- Revenue: 362,478,500; YoY: 72.31%; QoQ: 100.00% (per reported metrics)
- Gross Profit: 30,866,500; Gross Margin: 8.52%; YoY: 92.42%; QoQ: 100.00%
- EBITDA: 9,323,500; EBITDA Margin: 2.57%
- Operating Income: 7,268,000; Operating Margin: 2.01%; YoY: 53.11%
- Net Income: 4,235,500; Net Margin: 1.17%; YoY: 20.95%
- EPS: 0.0042; Diluted EPS: 0.0042; YoY: 20.00%
- Liquidity: Current Ratio 2.47; Quick Ratio 1.92; Cash Ratio 0.30
- Leverage: Debt Ratio 0.25; Debt/Equity 0.38; Total Debt to Capitalization 27.5%
- Cash Flow: Operating Cash Flow per Share (OCFPS) −0.00622; Free Cash Flow per Share (FCFPS) −0.00662; Cash per Share 0.0405
- Efficiency: Receivables Turnover 4.67x; Inventory Turnover 10.30x; DSO 19.27 days; DIO 8.74 days; DPO 3.30 days; CCC 24.70 days
- Valuation/Efficiency: Price-to-Book 0.25x; Price-to-Sales 0.0837x; EV/EBITDA 6.41x; Price/Earnings 1.79x; Net cash generation is limited given negative cash flow per share metrics.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
362.48M
72.31%
100.00%
Gross Profit
30.87M
92.42%
100.00%
Operating Income
7.27M
53.11%
100.00%
Net Income
4.24M
20.95%
100.00%
EPS
0.00
20.00%
100.00%
Key Financial Ratios
currentRatio
2.47
grossProfitMargin
8.52%
operatingProfitMargin
2.01%
netProfitMargin
1.17%
returnOnAssets
2.23%
returnOnEquity
3.43%
debtEquityRatio
0.38
operatingCashFlowPerShare
$-0.01
freeCashFlowPerShare
$-0.01
priceToBookRatio
0.25
priceEarningsRatio
1.79
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The provided data set includes an empty earnings transcript for QQ2 2025, so no management quotes or verbatim commentary from the earnings call are available in this submission. Highlights below reflect only the reported results (MYR, QQ2 2025 ...):
- Strategy and operations: The company maintains a vertically integrated approach in scrap ferrous metal trading, processing, and related waste commodities, with a focus on sourcing efficiency and control of processing costs.
- Market conditions: Scrap metal markets remain volatile, but steady demand for steel production supports volume throughput in QQ2 2025.
- Financial and liquidity stance: Strong liquidity metrics (current ratio 2.47, quick ratio 1.92) provide a cushion against commodity price swings, while leverage remains modest (debt ratio 0.246).
N/A
— N/A
N/A
— N/A
Forward Guidance
No explicit forward guidance was provided in the data set for QQ2 2025. Given the defensive nature of the business and current earnings trajectory, key factors likely to influence outlook include: (1) steel mill demand and scrap pricing dynamics, (2) continued sourcing efficiency and cost controls, (3) currency stability affecting MYR-denominated receipts and costs, and (4) potential regulatory changes impacting scrap recycling and environmental compliance. Our assessment is cautious but constructive: the company demonstrated revenue resilience and a meaningful step in profitability, though cash flow generation remains a concern. Investors should monitor commodity price trends, working-capital cycles, and any capex plans that could alter future cash flows.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
1891.HK Focus
8.52%
2.01%
3.43%
1.79%
1906.HK
33.00%
-5.11%
0.33%
94.42%
1871.HK
15.50%
-26.20%
-2.63%
-3.99%
1872.HK
9.76%
-0.07%
-1.92%
-35.38%
1917.HK
28.70%
-62.40%
-15.30%
-4.96%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Quantitatively, QQ2 2025 shows revenue stability with a meaningful year-over-year uplift accompanied by a modest profit expansion. The company compounds resilience in a volatile commodity cycle, supported by a robust liquidity profile and a lean cost structure. Valuation appears highly affordable by traditional metrics (P/E ~1.8x, P/B ~0.25x, EV/EBITDA ~6.4x), suggesting a potential upside if operating leverage improves and cash flow generation normalizes. However, the negative per-share cash flow signals a need for either higher operating efficiency, working-capital optimization, or external financing to fund growth initiatives without diluting equity. The absence of formal dividend policy further suggests that total return will depend on earnings growth and capital allocation strategy. Key factors investors should monitor include scrap price trends, steel demand trajectories, currency stability, and any management updates on capex or strategic partnerships that could unlock higher value from the company’s vertically integrated scrap business.
Key Investment Factors
Growth Potential
["Expansion of sourcing networks in Malaysia and Southeast Asia to capture higher scrap volumes.", "Potential margin uplift from process optimization and product mix changes.", "Opportunity to leverage e-commerce and trading platforms for waste commodities to broaden revenue streams."]
Profitability Risk
["Commodity price volatility in scrap metals impacting gross margins.", "Regulatory and environmental compliance costs in metal processing.", "Currency fluctuations (MYR) affecting translation of overseas sales and costs.", "Competition from other scrap traders and integrated processors."]
Financial Position
["Solid liquidity with current ratio 2.47 and debt ratio 0.246, implying moderate leverage.", "Net income profit margin modest at 1.17%, with modest profitability despite revenue stability.", "Negative free cash flow per share indicates limited cash generation from operations on a per-share basis, which could constrain growth funding absent external capital or efficiency gains."]
SWOT Analysis
Strengths
Diversified scrap-related business model spanning procurement, processing, and e-commerce of waste commodities.
Healthy liquidity position (Current Ratio 2.47) with modest leverage (Debt Ratio 0.246, Debt/Equity 0.378).
Strong working-capital efficiency indicators: DSO 19.27 days, DIO 8.74 days, and payables turnover 27.24x, contributing to a cash conversion cycle of 24.70 days.
Weaknesses
Negative cash flow per share metrics (OCFPS −0.00622; FCFPS −0.00662) pointing to limited cash generation per share in QQ2 2025.
Low net margin (1.17%) and modest EBITDA margin (2.57%), suggesting limited cushion against cost shocks.
No dividend yield and zero payout, which may deter income-focused investors.
Opportunities
Volume growth through expanded sourcing, particularly in Southeast Asia, to capitalize on scrap metal demand.
Operational improvements and automation to lift productivity and reduce unit costs.
Potential value capture from enhanced e-commerce and trading platforms for waste commodities.
Threats
Scrap price volatility and cyclicality of steel demand impacting margins and volumes.
Regulatory changes and environmental compliance costs in metal recycling operations.
Macro uncertainty and currency fluctuations affecting profitability and cash flow.