Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on August 12, 2016.

 

KUALA LUMPUR: Enra Group Bhd, which recorded a near 10% jump in earnings in its financial year ended March 31, 2016 (FY16) on improved property development revenue and contribution from its oil and gas (O&G) segment, is anticipating further bottom line improvement in FY17.

However, Enra, which ventured into O&G last year and aspires to become a full-fledged O&G firm, doesn’t want to speculate on when its O&G business will generate more significant earnings or overtake its property development segment, though the venture is already starting to pay off.

“I am happy to say that our O&G business is a profitable venture, though it was a small profit. But we’ve to be prudent. Whatever we buy must have good cash flow,” said Enra executive deputy chairman Datuk Kamaluddin Abdullah after the group’s annual general meeting yesterday.

He stressed that the group will focus on acquiring services company in the upstream and downstream sectors but will not be involved in exploration or production.

In FY16, Enra’s O&G business accounted for about 10% of the group’s revenue and a similar quantum in terms of operating profit at RM2.53 million, while property development contributed some 80% of revenue with an operating profit of RM26.13 million.

Kamaluddin said Enra is now positioning itself as a “cost saver” in the O&G industry by offering cost optimisation solutions, including assets integration and assets maintenance, to established O&G firms.

“We are also looking for partners to come out with more new ideas and solutions that could help industry players,” he said.

Enra has an order book of RM100 million under its O&G business and is targeting to secure some of the upcoming O&G jobs, which have been estimated to be worth around RM1 billion in all.

Going forward, Kamaluddin said Enra will continue to look for business opportunities in both the property and O&G segments, but does not discount the possibility of venturing into other businesses should they provide a good opportunity.

Meanwhile, under the property business, he said Enra prefers to engage in property development instead of investment properties, as the latter may need a longer time to realise gains.

“We rather embark on a smaller scale [development] that could allow us to monetise it in the near term. Our main priority now is to focus on cash flow and monetising the assets we have,” he said, adding the group is looking at several assets, but nothing has firmed up.

“We are not looking for any big land banks now. Our priority is assets that could be monetised in the near term,” he stressed.

In the mean time, he said Enra will focus on selling the remaining 74 retail units of its Taman Shamelin Perkasa development. The development’s unbilled sales and unsold units are collectively worth some RM100 million.

Enra shares closed unchanged at RM2.03 yesterday, with a market value of RM273.88 million.

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