Atlan’s 2Q net profit jumps 123%

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KUALA LUMPUR (Oct 14): Atlan Holdings Bhd’s net profit for the second quarter ended Aug 31, 2014 (2QFY15) jumped 123% to RM10.31 million or 4.06 sen per share, from RM4.62 million, or 1.82 sen, a year ago, on strong performance of its business divisions.

Quarterly revenue however increased marginally to RM175.23 million, from RM174.35 million previously.

Atlan declared a second single-tier interim dividend of 10 sen per share, bringing the total dividend declared in the 1HFY15 to 25 sen. Atlan had in June declared the first interim single-tier dividend of 15 sen per share, amounting to RM38 million which was paid on Aug 15.

On segmental basis, Atlan’s operating profit for duty free, and property & hospitality businesses, rose by 9.9% and 13.1% to RM16.88 million and RM3.79 million, from RM15.35 million and RM3.35 million respectively, on higher revenue contribution.

On the other hand, the automotive division posted a segment profit of RM1.36 million, from a loss of RM603,000, on favourable sales mix and foreign exchange rate; while the segment loss for its investment holding and other divisions narrowed to RM1.34 million and RM2.23 million.

Cumulatively, Atlan’s net profit for the six months to Aug 31, 2014 (1HFY15) plunged 86% to RM21.17 million, from RM151.56 million previously, while revenue marginally increased to RM351.8 million.

The sharply lower net profit for 1HFY15 was due to the divestment gain of RM131.6 million made in the previous corresponding period, as a result of land sales.

To recap, Atlan via its subsidiary Atlan Technology Sdn Bhd, had on April 10, 2012, disposed a parcel of vacant leasehold land in Stulang Laut, Johor, for RM32.01 million cash.

In addition, Atlan’s 81.94% subsidiary, Duty Free International Ltd, completed the disposal of the remaining equity interest in several other parcels of land with buildings erected in Stulang Laut, in March last year. Both the disposal reaped an aggregate net gain of some RM131.6 million in 1HFY14.

Meanwhile, Atlan’s lacklustre performance for the first half of FY2015 was also partly due to poor performance of its business segments except for the automotive and duty free divisions, which the latter recorded higher demand for its products, as well as contributions from new outlets in klia2.

As for the group’s property and hospitality segment, the decrease in cumulative segment profit by 26.9% in 1HFY15 was due to lower revenue, while the higher loss in the investment holding segment was exacerbated by unfavourable fluctuation of market price for overseas investment, and higher professional fees incurred for corporate exercises.

Meanwhile, its other business generated a segment loss of RM4.39 million, from a segment profit of RM12.42 million in 1HFY14.

On its prospects, Atlan told Bursa Malaysia today that it is mindful of the challenges facing by the group for the financial year ending Feb 28, 2015 (FY15).

“The Group will continue to focus on quality of its goods and services, together with disciplined monitoring of the key cost drivers, whilst maintaining efficiency in the overall operations, in order to remain competitive and profitable,” added Atlan in a statement.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)