Higher-margin projects drive HE Group's Q1 profit surge
KUALA LUMPUR: Electrical engineering service provider HE Group Bhd posted a 92.6% year-on-year (YoY) growth in net profit for the first quarter ended March 31, 2025 (FY25), rising to RM2.9 million from RM1.5 million in the same quarter last year.
This growth was driven by a higher-margin project mix, which resulted in an expanded net profit margin of 9.2%, up from 2.3% in the same quarter last year.
Despite a softer revenue of RM31.5 million in Q1 FY25, primarily due to a few projects that were nearing completion, the company's strong profitability performance highlights its ability to adapt and deliver positive results.
The power distribution system segment was the key contributor to HE Group's Q1 FY25 revenue accounted for RM14.5 million, or 45.9% of total revenue.
The electrical equipment hookup followed this, and the retrofitting division generated RM11.3 million, representing 35.7% of revenue, marking a twofold increase from RM4.4 million in Q1 FY24.
The other building systems contributed the remaining portion and works business, which recorded RM5.8 million, or 18.4%.
HE Group managing director Haw Chee Seng said for the new financial year, the company faced a volatile operating environment shaped by global factors such as protectionist trade policies, trade tensions, and economic uncertainties.
'Nevertheless, our growing net profit and expanding margins reflect HE Group's resilience and our ability to adapt effectively, ensuring sustained profitability in a complex market landscape.
'Looking ahead, HE Group is well-positioned to benefit from Malaysia's rise as a digital infrastructure hub, which is driving significant investments in data centres.
'With the increasing adoption of cloud computing and artificial intelligence (AI), the country's data centre capacity is expected to double by 2025.
'Moreover, the electrical and electronics (E&E) sector, including the semiconductor industry, is experiencing growth driven by the rapid adoption of technologies like the Internet of Things and AI, coupled with a more stable global trade environment.
'These factors are set to encourage further expansion of multinational semiconductor operations in the region, aligning with HE Group's proven track record in delivering electrical infrastructure for high-tech facilities.
'Additionally, the renewable energy sector is gaining momentum as Malaysia progresses towards a low-carbon economy.
'The growing importance of the Battery Energy Storage Systems (BESS) to support renewable energy sources presents an
opportunity for the HE Group.
'With government initiatives accelerating BESS deployment, we are actively exploring large-scale projects where HE Group can leverage its expertise and contribute meaningfully to the country's energy transition,' he said.
Barring major disruptions, HE Group expects to sustain positive momentum.
'However, we remain mindful of macroeconomic uncertainties that could influence project timelines and investment decisions.
'In navigating this, HE Group will continue to focus on disciplined cost control, optimising operational efficiency, and strengthening financial resilience to manage risks effectively,' Haw said.
HE Group maintains a strong net cash position, with total cash and cash equivalents of RM53.5 million, far exceeding total borrowings of RM1.1 million as of March 31, 2025.
Moving forward, HE Group remains focused on delivering value to its stakeholders while overcoming the obstacles associated with the global operating environment.
With a strong track record and a strategic focus on high-growth sectors, the company is well positioned to capture emerging opportunities and improve its overall performance.
Haw said HE Group will continue to focus on disciplined cost control, optimising operational efficiency, and strengthening financial resilience to manage risks effectively.
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