KUALA LUMPUR (Aug 19): MPHB Capital Bhd saw its net profit plunge 95% to RM10.81 million or 1.51 sen per share for its second quarter ended June 30, 2015 (2QFY15), from RM198.86 million or 27.81 sen per share a year earlier.

Meanwhile, revenue for the quarter rose 11% to RM101.86 million, from RM91.80 million a year ago.

In its filing with the stock exchange today, the significant drop in profit was attributed to an extraordinary gain of RM195.86 million recorded in the previous year’s corresponding quarter, following the sale of investment properties.

On a segmental basis, MPHB (fundamental: 1.9; valuation: 2.1) said its insurance division saw marginally higher profit due to improved underwriting profit, while its credit division saw a 46% decline in profit due to the adverse impact of the fair value changes in investment securities.

Its investments division saw a loss before tax of RM2.16 million for the quarter, compared to profit before tax of RM181.17 million in the previous year, due to the aforementioned disposal of properties.

For the first half of 2015 (1HFY15), MPHB’s net profit dropped 87% to RM26.83 million from RM207.42 million in 1HFY14, while revenue increased 7% to RM191.90 million from RM178.56 million.

Going forward, MPHB sees a challenging environment ahead due to the lower growth rate expected in 2015.

“The Malaysian economy, with the weakening of the ringgit, is expected to be driven mainly by private sector demand, supported by investments in the export-related businesses, service industry and infrastructure projects. Private consumption is expected to be slower with the introduction of the goods and services tax,” it said.

After the disposal of a 49% stake in its insurance subsidiary Multi-Purpose Insurans Bhd (MPIB), the insurance company changed its name to MPI Generali Insurans Bhd, following the integration with the Generali Group.

“Going forward, MPI Generali will benefit from this strategic partnership and aims to be transformed into one of the key long-term players, financially strong and stable, in the local property and casualty industry,” said MPHB.

Meanwhile, its investments division will continue to seek profitable joint ventures with established partners. MPHB added that it would consider an outright disposal of the division to enhance shareholders’ value.

MPHB rose 6 sen or 3.97% to RM1.57, giving it a market capitalisation of RM1.08 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.)