KUALA LUMPUR (Aug 19): Taliworks Corp Bhd's net profit fell 25.2% to RM9.49 million or 2.17 sen per share for the second quarter ended June 30, 2015 (2QFY15) from RM12.69 million or 2.91 sen per share a year ago, due to higher provision for discounting and as a result of a significant specific pavement repairs incurred in its 35%-owned unit Cerah Sama Sdn Bhd (CSSB). 

Revenue for the quarter climbed 24.3% to RM101.7 million from RM81.80 million in 2QFY14, underpinned by consolidation of the financial results of CSSB as a subsidiary. 

The higher contribution from both construction and waste management segment also lift its revenue for the quarter, its filing with Bursa Malaysia showed.

No dividend was declared for the current quarter under review.

For the cumulative six months (6MFY15), Taliworks' net profit rose 49.2% to RM24.52 million or 5.62 sen per share from RM16.44 million or 3.77 sen per share due to lower provision for discounting.

"Stripping out the effects from the discounting, the group's profit before tax (PBT) stood at RM39.2 million, a marginal increase from RM39 million recorded in the corresponding period," it said. 

Revenue for 6MFY15 rose 26.25% to RM198.72 million from RM157.4 million in 6MFY14.

Looking forward, the group expects that Sungai Selangor Phase 1 (SSP1), which is the main contributor to the group, will continue to run its production above its design capacity of 950 million liters per day (MLD) due to continuous increase in demand for treated water in the Klang Valley.

It pointed out that the current uncertainties in the outcome of the position of  Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) in the restructuring of the Selangor water sector may weigh down on the group's performance given the fair value adjustments are required on deferred consideration from continued delays in receiving payments if the matter is not resolved.

"Depending on further developments, the board may, consider making specific provisions to the amount outstanding from Splash by year end," it added. 

The group is optimistic on the prospects of new infrastructure businesses, in particular mature operating infrastructure assets in developed markets, which it has identified to be a new growth area. 

Taliworks has indentified TEI Sdn Bhd (formerly known as Pinggiran Infrastructure Sdn Bhd) as the flagship entity to pursue this business opportunity both locally and abroad, due to the core expertise of the group which lies in the management and operations of concession-based assets/businesses.

"The recent proposed placement of new shares is intended to raise proceeds to enable the group to pursue future investments with a view to further strengthen and grow its businesses this year," Taliworks added. 

Shares in Taliworks (fundamental: 1.3; valuation: 2.4) closed one sen or 0.29% lower at RM3.48 today, for a market capitalisation of RM1.54 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.)