Hong Lai Huat Group (CTO) H2 2023 earnings summary

Executive summary

• FY2023 loss attributable to equity holders widened to $23.773 million from $12.049 million, mainly due to agriculture-division impairments and weak property sales.

• A sale agreement was signed in February 2024 to dispose of the Cambodian agriculture businesses; the planned exit would leave property development and real estate as the core focus.

• Royal Platinum’s 50 commercial units were completed in FY2023; residential towers remained on schedule for FY2024 completion.

Financial highlights

• Revenue fell to $267,000 in FY2023 from $1.641 million in FY2022; FY2023 property sales were nil, while crop sales were $451,000 and negative property revenue was $184,000.

• Gross profit was nil versus $677,000; other income declined to $1.110 million from $2.400 million, while administrative expenses fell to $6.747 million from $8.330 million.

• Loss before tax was $25.973 million; a $2.200 million income tax credit reduced the FY2023 net loss to $23.773 million.

• Cash used in operations was $5.643 million versus $1.860 million generated in FY2022; cash and cash equivalents per cash flow statement ended at $1.617 million.

Outlook and guidance

• Both Royal Platinum residential towers, comprising 851 units, were targeted for completion in FY2024; sales had improved slightly in FY2023 but remained slow.

• FY2024 plans included harvesting remaining cassava and arranging handover of the agriculture operation following completion of its proposed sale.

• Management expected progressive receipt of estimated net sale proceeds of $44.238 million, with the remaining consideration expected by February 2025; the sale remained subject to completion and shareholder approval.

• Future development of land in Phnom Penh and Sihanoukville is subject to market conditions and feasibility.