KUALA LUMPUR (Nov 13): Used-car financier ELK-Desa Resources Bhd has reported a 44.6% hike in second quarter net profit mainly due to an increase in hire purchase receivables and a significantly lower impairment allowance.

Net profit for the quarter ended Sept 30, 2018 rose to RM8.62 million or 2.94 sen per share, from RM5.96 million or 2.43 sen per share a year ago, the group said in a filing with Bursa Malaysia.

The group declared an interim dividend of 3.5 sen per share, payable on Jan 30, with the ex-date on Jan 16.

ELK-Desa, which is also involved in the furniture business, said quarterly revenue grew 24.2% to RM31 million, from RM24.96 million previously.

Combined net profit for the first half of the financial year increased 51.6% to RM16.69 million, from RM11.01 million in the previous year, while revenue for the same period grew 18.4% to RM59.82 million from RM50.54 million.

Moving forward, ELK-Desa said it intends to maintain its momentum in growing its hire purchase portfolio in the current financial year ending March 31, 2019 (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," it said.

"The furniture business will continue to focus its operations in the domestic market. In conclusion, the board is confident that the group's performance for FY19 is expected to be better than FY18," it added.

In a separate statement, ELK-Desa executive director and chief financial officer Teoh Seng Hee said expansion in hire purchase portfolio will continue to be the key growth driver for the group.

He added that the positive consumer sentiments in Malaysia's economy and the group's efforts towards prudent credit risk management and credit recovery are key factors in driving growth.

"Moving forward, we are encouraged by the government's recently announced budget initiatives to alleviate the rising cost of living for deserving Malaysians while creating opportunities to enhance the economy. We believe that these initiatives will further bolster consumer confidence, which will in turn augur well for our business," he said.

ELK-Desa's shares closed unchanged at RM1.18 today, giving the group a market capitalisation of RM349.41 million.