Ho Wah Genting Berhad’s Earnings Deterioration and Strategic Path to Recovery

Ho Wah Genting Berhad (HWGB) has faced a precipitous decline in earnings in 2025, marked by a 6.5% year-over-year revenue drop to RM53.8 million in Q1 and a subsequent MYR -408,000 loss before tax in Q2, compared to a MYR 2.424 million profit in the prior-year period [1][2]. This deterioration reflects broader operational challenges, including reduced demand in its Moulded Power Supply Cord Sets Division and elevated input costs such as copper prices [3]. Compounding these issues, the company’s return on capital employed (ROCE) has plummeted from 2.8% five years ago to 1.4% as of September 2024, significantly underperforming the industry average of 11% [4].

The company’s financial resilience is further strained by a Total Debt/Total Equity ratio of 46.02 and a Long Term Debt/Equity ratio of 4.64, indicating heavy reliance on debt financing [5]. To address liquidity pressures, HWGB initially proposed a private placement to raise up to RM4 million for debt repayment and working capital but abandoned the plan after shareholders rejected the resolution [6]. This setback underscores the company’s limited capacity to secure external funding, leaving it reliant on internal cost management and operational efficiency improvements.

Despite these challenges, HWGB has outlined a tentative recovery strategy. The company has reduced current liabilities to 27% of total assets, signaling progress in mitigating short-term risks [4]. Additionally, Genting Group’s broader recovery initiatives—such as Genting Malaysia’s focus on tourism-driven growth from the 2025 ASEAN Chairmanship and Genting Singapore’s new attractions—could indirectly benefit HWGB through synergies in brand and market positioning [7]. However, these efforts remain speculative, as HWGB’s standalone financials continue to deteriorate, with a net loss of RM1.84 million in Q1 2025 [2].

Investors must weigh the company’s operational vulnerabilities against its strategic pivot toward cost optimization and debt restructuring. While the Genting Group’s long-term prospects are bolstered by potential casino licensing in New York and biotech advancements, HWGB’s standalone recovery hinges on its ability to stabilize revenue streams and curb rising operating expenses [8]. For now, the path to profitability remains uncertain, with ROCE trends and liquidity metrics serving as critical indicators of future performance.

Source:
[1] HWGB: HO WAH GENTING BERHAD Announces Q2 FY 2025 Financial Results [https://klse.i3investor.com/web/announcement/detail/1989986]
[2] Ho Wah Genting Berhad First Quarter 2025 Earnings [https://finance.yahoo.com/news/ho-wah-genting-berhad-first-231247320.html]
[3] HO WAH GENTING BERHAD Q1 2025 Latest Quarterly Report Analysis [https://chenpak.com/en/06/5541/]
[4] Investors Could Be Concerned With Ho Wah Genting Berhad's ... [https://finance.yahoo.com/news/investors-could-concerned-ho-wah-011254739.html]
[5] Ho Wah Genting Bhd [https://www.reuters.com/markets/companies/HOWA.KL/]
[6] Ho Wah Genting aborts plan to raise RM4m via private placement [https://theedgemalaysia.com/node/756496]
[7] Genting poised to ride recovery and upside [https://www.thestar.com.my/business/business-news/2025/08/08/genting-poised-to-ride-recovery-and-upside]
[8] Genting's Long Road To Recovery [https://www.businesstoday.com.my/2025/06/01/gentings-long-road-to-recovery/]