From Local Showrooms to Global Strength: 5 Surprising Lessons from Hafary’s Record FY2025

The “Renovation Itch” and the Reality of Growth

In major metropolitan hubs, the rhythmic staccato of a neighbor’s drill or the arrival of palletized marble at a residential driveway is more than just a local nuisance; it is a leading indicator of economic sentiment. For Hafary Holdings Limited (HHL), this “renovation itch” serves as the primary engine for a business model that has matured from a regional distributor into a sophisticated global operator.

While the broader market remains fixated on shifting trade policies and inflationary volatility, Hafary’s FY2025 performance demonstrates remarkable top-line momentum. The Group reported a 9.1% increase in revenue, reaching $287.0 million. This growth is not merely a byproduct of higher price points but reflects a deeper strategic expansion into international manufacturing and high-value project pipelines.

1. The Manufacturing Dark Horse: A 35.6% Growth Leap

The most compelling narrative in Hafary’s latest reporting is the fundamental transformation of its Manufacturing segment. Once a tertiary consideration, this division has become a primary driver of operating leverage, posting a massive 35.6% revenue surge—from $46.5 million in FY2024 to $63.1 million in FY2025.

This leap represents a successful pivot from “cyclical middleman” to “vertically integrated producer.” By scaling production at its facilities in Kluang, Malaysia—a ramp-up that began in June 2023—Hafary has successfully bypassed many of the supply chain bottlenecks that plague its peers. Critically, this growth was fueled by an aggressive expansion into the United States market. Utilizing its Malaysian production base as a hedge against trade uncertainties in the East, Hafary is now positioning itself as a key supplier for Western distribution, effectively diversifying its geographical risk.

2. The “Bargain” in Shanghai: Profiting Before the First Sale

Strategic acquisitions are often expensive and dilutive, yet Hafary’s 2025 entry into the Shanghai market was a masterclass in opportunistic deal-making. In January 2025, the Group acquired 100% of MML Shanghai, recognizing a $234,000 gain from “negative goodwill” on the transaction.

Sophisticated investors will note that this was an Interested Person Transaction (IPT), as MML Shanghai was acquired from Malaysian Mosaics Sdn Bhd—a related party to Hafary’s controlling shareholder. By negotiating a purchase price below the fair value of the net identifiable assets, Hafary realized an immediate gain upon consolidation. Beyond the balance sheet, this synergistic acquisition provided a vital stabilizer for the Group’s “Project” segment. While the domestic project market in Singapore saw a slight 2.2% revenue decline in the second half of 2025, the inclusion of MML Shanghai helped bolster the segment’s annual figures, providing a necessary bridge into the massive Chinese commercial market.

3. Singapore’s Retail Resilience: The General Segment’s Steady Climb

Hafary’s “General” segment, which serves the retail and interior design sectors, remains the Group’s high-margin bedrock. This segment saw revenue expand by 9.4% in 2H2025, closely tracking the 5.7% expansion of the Singapore economy in the fourth quarter.

This resilience is underpinned by high residential transaction activity and a robust domestic infrastructure pipeline. As property owners continue to invest in asset enhancement, Hafary is capturing a larger share of the “domestic-oriented cluster.” The growth outlook is further reinforced by the government’s sustained commitment to public works, as highlighted in the Group’s outlook:

“The construction sector continues to be supported by a robust pipeline of projects… Major developments underway include Changi Airport Terminal 5, the Tuas Megaport expansion, and the integrated resort expansions.”

4. Mastering the “Interest” Game: Cutting Costs in a High-Rate World

Perhaps the most counter-intuitive finding in the FY2025 report is the significant reduction in finance costs. In an era of sustained high interest rates where peers are seeing margins eroded by debt service, Hafary’s finance costs actually decreased by 12.0%, falling from $12.2 million to $10.7 million.

This was no accident of the market; it was the result of a sophisticated financial strategy and active liability management. A granular review of Notes 18A through 18O reveals that the Group has been transitioning its debt profile away from more expensive unsecured current borrowings toward lower-cost secured debt. By capitalizing on an overall decrease in specific bank loan interest rates and maintaining an agile mix of fixed and floating rate instruments, Hafary reduced its upper-end borrowing rates from a maximum of 6.5% in 2024 to 5.4% in 2025. This interest rate sensitivity management has directly contributed to the Group’s 8.2% increase in net profit.

5. The Dividend Anchor: Consistency in Shifting Tides

During periods of global headline inflation, investors seek the “anchor” of consistent returns. Hafary has delivered on this front, maintaining a dividend payout identical to the previous year despite the heavy capital expenditures required for its manufacturing pivot.

The total dividend for FY2025 reached 2.75 cents per share, comprised of:

• 2nd Interim Dividend: 0.75 cent
• 2nd Special Interim Dividend: 0.75 cent
• Interim Dividend: 0.75 cent
• Special Interim Dividend: 0.50 cent

This payout consistency, backed by a net increase in cash flows from operating activities ($57.8 million for the full year), signals management’s confidence in its asset-light transition and long-term liquidity.

Conclusion: Looking Ahead to 2026

As we look toward 2026, the macroeconomic indicators suggest continued resilience. The Malaysian construction sector is forecast to grow by 6.1%, driven by major infrastructure like the LRT Mutiara Line and a surge in industrial facility demand. On a global scale, the IMF projects growth to remain steady at 3.3%, with technological investments in North America and Asia acting as a tailwind against shifting trade policies.

For the investor, the question is no longer whether Hafary can sell tiles in Singapore. The real story is whether the market has correctly priced its evolution into a vertically integrated, global logistics and manufacturing architect. With its foothold in US distribution and a bargain-priced entry into China, Hafary has laid a foundation that is increasingly decoupled from local property cycles and tethered to global industrial strength.

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