KUALA LUMPUR (Aug 17): ELK-Desa Resources Bhd, which saw its first-quarter net profit jump 59.8% year-on-year (y-o-y), is confident that its performance for the financial year ending March 31, 2019 (FY19) will be better than FY18.
The non-bank lender focused in the used-car segment posted a higher net profit of RM8.07 million in the three months ended June 30, 2018 (1QFY19) from RM5.05 million a year ago, mainly due to increase in hire purchaser portfolio and significantly lower impairment allowance.
This resulted in a higher earnings per share of 2.8 sen for 1QFY19 compared with 2.19 sen for 1QFY18.
Quarterly revenue also grew 12.7% to RM28.82 million from RM25.57 million in 1QFY18.
In a statement, ELK-Desa said the group’s total borrowings for 1QFY19 increased by 63% y-o-y due to higher drawdown of block discounting payables to support the increase of its hire purchase receivables.
"Impairment allowance decreased by 41% to RM3.84 million, while credit loss charge decreased to 0.92% from 1.79%. The improvement was mainly due to a stable economic environment during financial period under review and coupled with the group's concerted efforts in credit recovery," it added.
Despite the uncertain economic conditions ahead, ELK-Desa said the overall macro-economic factors, that is, labour market conditions, inflation outlook, cost of living and general public sentiments remain positive.
"In view of this, the group intends to maintain its momentum in growing its hire purchase portfolio in FY19 without compromising on the quality of its assets.
"The group will focus on its core business of second hand car hire purchase financing, which strategically operates in the underserved niche market, and continue to remain prudent in managing its credit risks," said ELK-Desa.
As for its furniture business, it will continue to focus its operations in the domestic market.
"However, the short term sales and profit margin could be affected by the imminent introduction of the sales and services tax," it warned.
ELK-Desa shares ended the morning session unchanged at RM1.19, with 173,600 shares done, bringing a market capitalisation of RM349.92 million.