KUALA LUMPUR (Nov 26): Sarawak-based Hock Seng Lee Bhd's (HSL) net profit fell 16.55% to RM17.85 million or 3.25 sen per share for the third quarter ended Sept 30, 2015 (3QFY15) from RM21.39 million or 3.89 sen per share a year earlier, on lower profit margin and higher construction cost.

HSL told Bursa Malaysia in its quarterly results announcement that the lower profit margin was recorded in the construction segment due to more projects being secured via open tender, and general increase in construction cost.

Its latest quarterly revenue, however, was up a marginal 1.98% to RM158.44 million from RM155.36 million in 3QFY14, its filing to Bursa Malaysia today showed.

The marine engineering and infrastructure specialist said the construction segment contributed RM154.63 million (98%) while the property development segment registered a contribution of RM3.81 million (2%) to its revenue.

Meanwhile, sales were lower in the property development segment during the quarter as the high-end gated and guarded residential project "la Promenade" was only launched at end of 3QFY15.

For the nine-month period ended Sept 30, 2015 (9MFY15), HSL's net profit fell 3.95% to RM54.52 million or 9.92 sen per share from RM56.76 million or 10.32 sen per share a year ago, even as its cumulative revenue grew 20.14% to RM494.5 million from RM411.6 million in 9MFY14.

In a statement, HSL managing director Datuk Paul Yu Chee Hoe said the company is keeping busy with some 17 new projects coming on the books so far this calendar year.

With the budget allocating substantial public infrastructure funds to Sarawak, he said the company can expect further opportunities.

"Barring any unforeseen circumstances, the group's revenue for 2015 is expected to surpass the 2014 level of RM604.7 million while increased open tendering, growing competition in general construction and rising operating costs will slightly impact margins.

"While we have netted numerous smaller works, several major bids are still awaiting outcomes," he added.

As at Sept 30, 2015, the group had RM1.6 billion worth of projects in hand, of which RM770 million remained unbilled

HSL shares closed one sen or 0.51% lower at RM1.93, for a market capitalisation of RM1.06 billion.

(Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)