Hock Seng Lee 3Q net profit up 175% q-o-q on higher revenue

Hock Seng Lee 3Q net profit up 175% q-o-q on higher revenue
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KUALA LUMPUR (Nov 26): Hock Seng Lee Bhd’s (HSL) net profit for the third quarter ended Sept 30, 2020 (3QFY20) surged 174.88% to RM10.87 million, from RM3.95 million in the immediate preceding quarter, on higher revenue.

The group’s revenue also jumped 94.04% quarter-on-quarter to RM161.16 million from RM83.05 million, the group’s filing to Bursa Malaysia showed.

However, on a year-on-year basis, the group’s net profit for 3QFY20 fell 25.36% from RM14.56 million, while its revenue slipped 7.3% from RM173.84 million.

“The lower figures were mainly attributed to Covid-19, resulting in productivity loss — which is still at roughly half of normal — and tighter margins.

“There has been an increase in operating costs and fixed overheads incurred during the Movement Control Order (MCO) and Conditional Movement Control Order (CMCO). The property segment took the hardest hit with almost 50% drop in net profits,” it said.

The group said its construction segment revenue and net profit before tax fell to RM147.54 million and RM8.89 million compared to the previous year’s corresponding quarter figures of RM149.39 million and RM11.72 million respectively.

Its property development segment also saw its revenue and net profit before tax fell to RM13.62 million and RM4.14 million, from RM24.45 million and RM8.11 million respectively.

For the nine months ended Sept 30, 2020, the group’s net profit dropped by 50.37% to RM22.37 million from RM45.08 million a year earlier. Its revenue also decreased by 28.1% to RM356.6 million from RM495.97 million.

HSL managing director Datuk Paul Yu Chee Hoe said the group had some modest success in securing some new contracts to date of about RM101 million, which included an inner ring road for Kuching City valued at RM66 million, a new school in Padawan (RM13 million), water supply project in Tanjung Manis (RM17 million) and a few others.

“Challenging times remain for the construction industry. HSL is not spared from issues faced by others. Labour shortages remain our chief problem, deeply limiting construction activities.

“Of particular concern to us now is the high number of Covid positive cases in Malaysia. Any MCO, CMCO or even location-specific EMCO will have an impact on construction, especially as our projects span Sarawak and in different specialities,” he said.

Amidst the many challenges posed by the pandemic resulting in non-working periods and reduced productivity, the group is mindful of the projects’ completion dates which have to be met.

“The group is working closely with all our clients to find ways to mitigate and manage the risks and in our project delivery to the reasonable satisfaction of our clients,” it said.

Despite the soft property market, HSL said it will continue to build and launch new phases of existing projects.

These projects include Highfields phase 2b, continuation of Precinct Grande in La Promenade, expansion of Vista Industrial Park (VIP), and the all-new Samariang Aman 3.

At noon break, HSL fell 4 sen or 3.74% to 90 sen, valuing the company at RM494.57 million.

Surin Murugiah