Gadang 1Q net profit jumps 34% to RM9.54m on construction activities

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KUALA LUMPUR: Construction and property developer Gadang Holdings Bhd’s net profit for the first quarter ended Aug 31, 2014 (1QFY15) surged 34% to RM9.54 million or 4.41 sen per share, from RM7.14 million or 3.63 sen per share a year ago, on higher contributions from its construction activities.

Revenue in 1QFY15 climbed 18% to RM133.36 million from RM113.45 million a year ago.

On a segmental basis, the construction division’s pre-tax profit almost doubled to RM10.32 million from RM5.46 million on better contract values achieved and higher progress billings from its ongoing projects. The division’s revenue jumped 21% to RM109.06 million from RM89.85 million.

For its property division, the group saw a 15% decrease in pre-tax profit to RM3.71 million from RM4.35 million on higher marketing costs. However, revenue for the segment grew 7% to RM20.54 million from RM19.25 million. The group’s current property developments are in Kuala Lumpur, Johor and Kedah.

Gadang’s utility division — which includes water and hydropower concessions in Indonesia — saw its pre-tax profit shrink 52% to RM534,000 from RM1.11 million previously, mainly due to the disposal of its indirect subsidiary PT Sarana Tirta Rejeki in November last year, as well as a weakening rupiah — which is the division’s functional currency.

The plantation business’s pre-tax loss narrowed to RM537,000 from RM629,000, due to extensive harvesting activities. Its revenue tripled to RM281,000 from RM85,000 previously. Gadang ventured into the palm oil business in 2009, with a plantation land bank of 5,200 acres (2,104ha) in Ranau, Sabah.

On its future prospects, Gadang expects the performance in FY15 to further improve in tandem with its outstanding construction order book of some RM1.3 billion.

“The group’s property division shall continue to perform well with a total pipeline gross development value of RM2 billion, comprising ongoing developments in Cyberjaya, Bandar Puncak Sena township in Kedah, the remaining phases of The Vyne (Kuala Lumpur), and the Capital City joint development project (Johor Baru),” it said in a filing with Bursa Malaysia yesterday.

Gadang’s share price shed 3.25% to close at RM1.49 yesterday, giving it a market capitalisation of RM320.23 million.

 

This article first appeared in The Edge Financial Daily, on October 29, 2014.