TECHNICAL ANALYSIS:

EP as mentioned in my telegram 3.10-3.12
CL close below 3.00
TP follow my red line 3.30, 3.58, 3.92

NICE BAND

FINANCIAL ANALYSIS:

Financial and Prospect Overview of HeiTech Padu Berhad (HTPADU)

1. Financial Performance

• Cash Ratio:

  Cash and bank balances as of 30 September 2024: RM 48.12 million

  Current liabilities: RM 316.70 million

  Cash Ratio = Cash / Current Liabilities = 48.12 / 316.70 = 0.15

  Interpretation: The company has only RM0.15 in cash for every RM1 of current liabilities, indicating liquidity challenges.

• Profit Margin:

  • Revenue for the 9-month period ending 30 September 2024: RM 233.98 million
  • Profit after tax: RM 7.52 million

    Profit Margin = (Profit After Tax / Revenue) x 100 = (7.52 / 233.98) x 100 = 3.21%

    Interpretation: The company recorded a modest profit margin, improving from the previous loss-making year.

• Net Asset Value (NAV):

  • Total shareholders' equity (as of 30 September 2024): RM 170.93 million
  • Number of ordinary shares: 111.35 million

    NAV per Share = Shareholders' Equity / Total Ordinary Shares = 170.93 / 111.35 = RM 1.54 per share

2. Reasons for Profit or Loss

• Key Contributing Factors to Profit:

  • Disposal of land and building resulted in a significant gain that bolstered profits.
  • Effective cost control and operational improvement efforts in some business segments.
  • Increased revenue in the current period (RM 233.98 million) compared to the corresponding period in 2023 (RM 190.94 million), reflecting improved business activities.

• Key Cost Components:

  • Substantial spending on hardware and software purchases (RM 73.09 million) and project implementation costs (RM 34.01 million).
  • Finance costs for borrowings and lease liabilities totaled RM 3.80 million, impacting overall profitability.

• Comparative Recovery:

  In contrast to the loss of RM 9.04 million in 2023, the profit turnaround in 2024 demonstrates improved financial management and revenue growth from key projects.

3. Upcoming Prospects

• New Government Contracts:

  • HeiTech Padu has secured major government contracts, including the RM 892.2 million contract for the National Integrated Immigration System (NIISe) for the Immigration Department of Malaysia.
  • A RM 133.73 million contract with the Road Transport Department for revamping digital systems was signed in late 2024.

• Private Placement for Capital Raising:

  • The company successfully raised approximately RM 18.9 million through the issuance of shares, which will support its financial position and project funding.

• Business Segments Focus:

  • The Technology Market Group (TMG) continues to be a significant revenue driver, contributing to IT system integration and managed services.
  • Expansion into niche markets like healthcare, defense, and renewable energy provides diversification opportunities.

• Economic Outlook:

  The broader Malaysian economy’s growth forecast (estimated at 5.2% for the first three quarters of 2024) is expected to have a positive spillover effect on HeiTech Padu's activities, especially in the public sector digital transformation space.

Summary

HeiTech Padu Berhad is showing signs of financial recovery with improved revenues and strategic contracts in place. However, liquidity remains tight, as evidenced by the low cash ratio. The company’s prospects look promising due to key government projects, but close monitoring of debt obligations and cost management is crucial to sustaining profitability.