KUALA LUMPUR (Aug 22): Boon Koon Group Bhd saw almost a tenfold surge in its net profit to of RM3.12 million in its first quarter of financial year 2018 (1QFY18) ending March 31, 2018 from RM300,000 recorded in 1QFY17.
In a filing with Bursa Malaysia today, Boon Koon Group said this was on the back of a 10% rise in revenue at RM29.33 million from RM26.55 in the preceding year.
Prior to this, the Group has been in the red for five consecutive financial years.
“This year, our internal target of profit before tax (PBT) is at a minimum of RM3 million for our core business,” Boon Koon's director, Chiau How Choon, told reporters when speaking about its rebuilt commercial vehicle business, adding that cost-cutting and internal restructuring measures have shown results as reflected in its 1Q performance.
Chiau was speaking to reporters at Boon Koon's 15th annual general meeting today in Kuala Lumpur.
He said that the Group is confident that the following quarters of FY18 could perform stronger than its 1Q.
“The demand for commercial rebuilt vehicles still remains challenging, but we are the largest approved permit (AP) holder in Malaysia for rebuilt commercial vehicles and that gives us a competitive advantage,” he added.
The Group is not looking to fork out cash for expansion of its existing capacity, as the utilisation rate of its plants stands at about 30%.
Last April, Boon Koon saw a reshuffle of its board when Chin Hin Group Bhd’s founder and deputy executive chairman Datuk Seri Chiau Beng Teik emerged as Boon Koon’s major shareholder and non-executive chairman, and his son, Chiau Haw Choon appointed as director.
As of July, Chiau Beng Teik owns 28.52% stake in Boon Koon, while its founder-cum-executive chairman, Datuk Goh Boon Koon, holds an 8.56% direct stake.
Goh today said that he is “confident” in the new management and has plans to further increase his shareholdings in the company.
With the new shareholders and management in Boon Koon, Chiau Haw Choon said that internal restructuring and cost-cutting measures are starting to show results, and aims to generate RM5 million PBT in the following year (FY19), excluding its property development venture.
Over at its property development segment, Boon Koon is currently looking at utilising its own Johor land parcels to develop a semi-detached factory for small and medium industrial users, with a gross development value (GDV) of RM75 million.
The industrial project is to be launched in 2QFY19, and is expected to generate RM25 million additional profit then.
Boon Koon is also on the lookout for suitable land banks in the Klang Valley to develop high-rise, affordable properties on its own or with its JV company, with some already in the negotiation stage, he said.
The company expects a double-digit bottomline growth starting from FY19, which is when its property development segment will start to be recognised, including its ongoing Aera Service Residence JV project with Aera Property Group Sdn Bhd.
For Aera Service Residence in Petaling Jaya, Boon Koon is expecting to reap RM36 million profit after tax over a period of four years, starting from next year.
He revealed that the company is considering to raise funds via a private placement in FY18, in order to support its future property development ventures and to provide for the working capital needed for its existing business.