KUALA LUMPUR: HIL Industries Bhd expects its results for financial year 2014 ending December (FY14) to be a “pleasant surprise” as contribution from its property development segment kicks in from the third quarter (3Q).
Already, the group’s net profit of RM6.73 million for the first half (1H) of this year has more than doubled compared with net profit for the full FY13 of RM2.78 million.
HIL chief executive officer Milton Norman Ng Kwee Leong attributed the improved 1H net profit to the downsizing of its loss-making China operations. Its workforce was cut from 1,500 to 300.
“We will release our 3Q results this week, which will include the earnings from our property development venture. I can’t comment on the figures, but what I can say is it will be a pleasant surprise,” Kwee Leong told The Edge Financial Daily in an interview.
The group returned to the black with a net profit of RM2.78 million in FY13 from a net loss of RM3.11 million in FY12, thanks to increased sales from its automotive segment and the turnaround of its China operations as a result of a cost management exercise. Revenue for FY13 was higher at RM81.65 million from RM79.73 million in FY12.
Plastic injection moulding manufacturer HIL has had an encouraging start to its foray into property development, witnessing good take-up rates at its two maiden projects in Shah Alam, Selangor this year.
Totalling RM110 million in gross development value (GDV), Taman Kemuning Hijauan 2 features 116 units of terraced houses, while Kemuning Greenhills consists of 56 units of semi-detached homes.
“For Taman Kemuning, we have sold 107 out of our 116 units and for Kemuning Greenhills we have sold 49 out of the 56 units,” said Kwee Leong.
Plans are afoot to develop a 5-acre (2ha) piece of land in Shah Alam with a GDV of RM80 million next year.
“Another 35 acres located in Ayer Keroh, Malacca will be developed once the alignment for the high-speed rail link between Kuala Lumpur and Singapore, which will pass through Ayer Keroh, is confirmed,” said Kwee Leong.
He said HIL is currently in negotiations to purchase land in Klang, Selangor, but declined to elaborate.
Property development is not entirely uncharted waters for Kwee Leong who, together with his father Datuk Ng Boon Thong @ Ng Thian Hock, sits on the board of property developer A&M Realty Bhd, which is controlled by the Ng family.
Boon Thong is chairman of both HIL and A&M, while Kwee Leong is an executive director in A&M and his brother Datuk Ambrose Leonard Ng Kwee Heng is the managing director of A&M.
However, Kwee Leong said there is no conflict of interest between the two companies, as A&M’s focus is more on higher-end property projects while HIL focuses on the medium-cost range.
Prior to its property development venture, HIL’s main revenue contributor was the plastics injection moulding business that serves three segments — auto, information technology, and electrical and electronics.
The group has two manufacturing plants in Shah Alam, one in Penang and a plant in Suzhou, China.
HIL is 65.9% owned by its two largest shareholders, Dalta Industries Sdn Bhd and Boon Thong. Its net cash position as at June 30, 2014 stood at RM101.7 million.
HIL was profiled in The Edge Research’s Stocks with Momentum column in The Edge Financial Daily on Nov 5. The item stated that the group’s appeal seems to lie in being a privatisation play, given its low free float and large cash holding. The stock was also listed one of the stocks in Tong’s Momentum Portfolio.
Kwee Leong said it is in the best interests of the group to remain listed for now. “Being a listed entity, it gives credence to our reputation and confidence to our customers.”
HIL’s share price has been trending upwards from 40.1 sen a year ago to close at 77 sen on Friday, giving it a market capitalisation of RM213 million.
This article first appeared in The Edge Financial Daily, on November 24, 2014.