Thursday 28 Mar 2024
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KUALA LUMPUR: RCE Capital Bhd will be stricter on granting loans amid the change in the current economic weather which is getting gloomy. 

“Definitely the focus is not so much on growing the business but more on ensuring we have good quality loans. Having said that, we will be tying up with the central bank for the CCRIS (Central Credit Reference Information System),” said chief executive officer Loh Kam Chuin. 

“With that, we will have a more comprehensive look at the borrowers’ portfolio,” he told the press after RCE’s annual general meeting (AGM) yesterday.

Loh said the move is in line with the company’s cautious outlook on the current business environment.

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The CCRIS is a database that allows users to assess the profile and total exposure of borrowers, allowing RCE to be more thorough in issuing loans, thus maintaining the quality of its loans.

On the prospects for the current financial year ending March 31, 2016 (FY16), Loh said the company is maintaining a cautious outlook, with the consumer financing segment to be the main contributor to the company’s performance.

Meanwhile, he said that RCE (fundamental: 1.25; valuation: 2.0) will not be focusing on the commercial financing segment, as the segment is seen to be challenging.

“We have not been focusing too much on the [corporate loan] business. For the confirming and factoring side, it is quite a high-risk business. We want to take a step back and reassess the situation. But there is still a customer base right now that is still generating income for us,” he said.

On the company’s revenue and profit targets for FY16, Loh declined to comment, but said the company is on track to achieve its internal targets, based on its performance for the first quarter ended June 30, 2015 (1QFY16).

“If you look at the financial results, you can have an idea of our performance. As I said earlier, we are not chasing growth for the sake of growth; we are not looking for double-digit growth or whatsoever.

“Our focus is to make sure that we continue to give out quality loans. That will be paramount to us,” he said, adding that the company is always aiming to improve its financials.

For 1QFY16 ended June 30, RCE’s net profit grew 37% to RM9.44 million or 0.74 sen per share, from RM6.88 million or 0.6 sen per share in 1QFY15, on the back of a 23% rise in revenue to RM37.49 million, from RM30.41 million a year earlier.

The year-on-year improvement in its results were attributed to higher net interest income from its loan financing segment.

The group announced a final dividend of 1.5 sen for FY15, and a special dividend of 10.5 sen for 1QFY16. The two dividend payments are payable on Oct 8.

Asked if the company is eyeing any acquisition targets, following the company’s acquisition of Strategi Interaksi Sdn Bhd and EXP Payment Sdn Bhd last year, Loh said RCE does not have any particular target at this point in time. 

However, he said the company remains open to opportunities that may arise, as long as they complement and provide value to RCE.

RCE rose 0.5 sen or 1.33% to 38 sen per share yesterday, bringing its market capitalisation to RM479.27 million.


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. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

 

This article first appeared in digitaledge Daily, on September 3, 2015.

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