Highway Holdings Limited - Common Stock (HIHO) Mar 2025 Filing Analysis

The electric OEM segment contracted as a percentage of sales in fiscal 2025, falling back toward its historical mix after the temporary increase in fiscal 2024. Product revenue increased from $2.029 million to $2.912 million, but total segment revenue declined from $2.847 million to $2.912 million because the prior year included $818,000 of electronic assembly subcontracting revenue that did not recur. (1 contracting, 1 exited)

Fiscal 2025 showed a recovery rather than deterioration: sales increased 17.3% year over year to $7.412 million, and European sales rose to 85.3% of revenue from 66.7%. However, the recovery remains exposed to a highly concentrated European customer base and management describes prior European demand as cyclical and subject to post-pandemic swings. Compared with fiscal 2024, severity eased, but the risk remains high because Europe is now more important to revenue. (1 easing)

The risk is still high, although management's restructuring is reducing direct exposure. The company moved labor-intensive work to Myanmar and reduced its Shenzhen manufacturing workforce to about 40 employees, while increasing automation. However, Shenzhen costs and inspections remain elevated, customers have already sourced some products elsewhere, and the Shenzhen lease expires February 28, 2026. The company also accrued approximately $486,000 of employee termination liabilities connected with the relocation plan. (1 stable)