Gagasan Nadi Cergas 2Q net profit down 77% as MCO halt construction activities

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KUALA LUMPUR (Aug 19): Construction group and concessionaire Gagasan Nadi Cergas Bhd saw its net profit fall 76.6% to RM1.61 million in the second quarter ended June 30, 2020 (2QFY20) from RM6.88 million a year ago, on lower revenue and lower profits recorded from construction and property development projects.

This resulted in a lower earnings per share of 0.21 sen for 2QFY20 compared with 0.91 sen for 2QFY19.

Revenue for the quarter also declined 43.5% to RM40.09 million from RM71.02 million a year ago, due to lower progress from construction projects that were all halted during the movement control order (MCO) period.

The weak quarterly performance dragged the group's net profit for the cumulative six months (1HFY20) down by 57.4% to RM5.56 million from RM13.06 million a year ago, while revenue fell 32% to RM95.24 million from RM139.91 million in 1HFY19.

In a bourse filing today, Gagasan Nadi Cergas said the MCO has negatively affected the group's construction and property development segments. 

"Construction activities at the group's construction projects have progressively resumed following the lifting of inter-state travelling by the government in June. Despite the group’s construction order book, which stood at RM452 million as at June 30, 2020, and the continuous tendering for new jobs, the board expects the performance of the construction segment for the current financial year ending Dec 31, 2020 (FY20) to be negatively affected by the Covid-19 pandemic.

It added that the performance of the group's facility management for the concession projects and the utility services segment is expected to be maintained.

"For the property development segment, performance is expected to improve for FY20 in line with the progress of the Antara Residence project. In spite of the pandemic and barring unforeseen circumstances, the group's result is expected to be satisfactory," it added.

"Winning new jobs even during the soft construction market indicates our competitiveness and clients’ trust in our ability to deliver high-quality design-and-build works. The strong order book helps us greatly in resource planning, and we will be looking to make up for the time lost during the MCO to catch up on construction progress in the second half of 2020," Gagasan Nadi Cergas group managing director Wan Azman Wan Kamal said in a separate statement.

He said the group is tendering for more projects, especially in the affordable housing category.

"The government’s recent announcements to encourage home ownership such as the Home Ownership Campaign, “Skim Perumahan Belia” and the reduction in overnight policy rate augur well for the take-up of strategically located residences and are anticipated to spur the property market.

Despite the rough economic predicament, our twin business model of construction and concession is a plus point for us to carry us through the economic fluctuations,” he added.

Gagasan Nadi Cergas shares closed down 0.5 sen or 1.96% at 25 today, bringing a market capitalisation of RM188.25 million. A total of 1.87 million shares were traded.