TA Enterprise' 1Q net profit jumps 81% to RM104.7m

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KUALA LUMPUR (June 25): TA Enterprise Bhd’s net profit jumped 81.47% to RM104.73 million for the first quarter ended April 30, 2015 (1QFY16) against RM57.71 million last year, mainly attributable to contribution from its credit and lending, and investment holding divisions.

This translates into earnings per share of 6.12 sen versus 3.37 sen last year, the group’s filing with Bursa Malaysia today showed.

Revenue however, contracted 7.67% to RM194.29 million, from RM210.43 million last year.
 
TA Enterprise’s investment holding division’s profit before tax went up by more than two-fold to RM58.3 million in 1QFY16, compared with RM24.4 million in the previous year, despite higher finance cost and lower foreign exchange gain.
 
“This division enjoyed higher investment interest income, gain on disposal of an associated company, gain on disposal of a subsidiary, fair value gain on investment securities, and fair value gain on derivatives,” said TA Enterprise.
 
Its credit and lending division, meanwhile, contributed RM63.9 million profit before tax to the group, compared with RM37 million a year ago, up 72.7%, on higher investment interest income, fair value gain on investment securities, and fair value gain on derivatives.
 
Its property investment division’s profit before tax came in at RM2.9 million, compared with RM1.4 million last year, contributed by higher rental income generated from investment properties.
 
On the other hand, its broking and financial services division’s profit before tax fell 16% to RM9 million, mainly due to a drop in brokerage income.
 
Its hotel division registered a lower net operating profit of RM24.8 million, as compared to RM26.8 million last year, mainly due to lower occupancy rate of the Movenpick Resort, Phuket and Swissotel Merchant Court, Singapore, which are currently under major renovation, it said.
 
Meanwhile, the property development division reported a loss before tax of RM6.2 million in 1QFY16, against a profit before tax of RM2.8 million in the previous year, due to lower project profit recognition and higher finance cost.
 
Moving forward, TAE said although recovery in the United States' economy is gaining momentum, the global economy is expected to remain subdued, in view of lower oil prices and China’s growth slowdown.
 
“Domestic’s economy is expected to be more challenging due to slower export growth and anticipated moderate private consumption, following the implementation of Goods and Services Tax (GST) on April 1, 2015,” it said.
 
However, the Group said it will continue to be profitable in the financial year ending Jan 31, 2016, barring any unforeseen circumstances.

TA Enterprise (fundamental: 0.8; valuation:2)’s shares closed 0.5 sen or 0.74% lower at 67.5 sen today, for a market capitalisation of RM1.16 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.)