KUALA LUMPUR: WZ Satu Bhd expects to see its net profit doubled for its financial year ending Aug 31, 2015, compared with a year ago, said its executive chairman and chief executive officer Tengku Uzir Tengku Ubaidillah.

The company posted a substantial jump in net profit to RM11.68 million for the 16-month consolidated financial period ended August 2014.

For its second quarter ended Feb 28, 2015, the company’s net profit came in at RM5.11 million on a revenue of RM86.37 million, which brought its cumulative six-month net profit to RM10.59 million on a revenue of RM146.27 million, according to its filing with Bursa Malaysia yesterday.

The filing showed that the earnings were primarily contributed by mining business, followed by the civil engineering, construction and oil and gas (O&G) segments — and that the current weak crude oil prices and weaker ringgit did not adversely impact the company’s performance.

It further read that WZ Satu expects its current year’s performance and profitability to be enhanced by the full year contribution from the civil engineering, construction and mining associates.

Earlier, Uzir told reporters after the company’s extraordinary general meeting (EGM) yesterday that he foresees the company’s mining segment to continue its trend of contributing to 50% of the company’s earnings for the rest of the year.

He, however, noted that WZ Satu (fundamental: 1.7; valuation: 1.1), which began its foray into the O&G business with the acquisition of Misi Setia Oil & Gas Sdn Bhd (MSOG) last year for RM27 million, is facing increased competition.

Falling oil prices have caused competitors to shift their business focus to the mid- to downstream spectrum of the value chain, he said, which is MSOG’s area of focus.

“As such, with other businesses moving their focus to these segments after they were impacted by falling oil prices in the upstream segments, it has become tougher for us. However, we are still tendering for contracts and have bid for RM1.1 billion in downstream projects,” he said.

As for the company’s civil engineering and construction division, Uzir said he is bullish about the industry, due to the ongoing infrastructure projects carried out by the government.

“We have RM300 million in work orders and RM1.2 billion of tenders in hand. Currently, we are actively bidding for other construction projects,” he said.

At the EGM earlier, shareholders approved of the disposal of wholly-owned unit, Weng Zheng Marketing Sdn Bhd, which is involved in the trading and processing of steel products, for RM6.1 million cash to WZ Satu managing director and substantial shareholder Tan Ching Kee.

“With this disposal, we are able to recoup about RM22.5 million, including inter-company borrowings, which Tan will reimburse back to us by taking over this company,” said Uzir, adding that the company is now in a net cash position of about RM40 million and the disposal will enhance its balance sheet further.

WZ Satu shares ended seven sen higher at RM1.52 yesterday, with a market capitalisation of RM384.24 million.

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This article first appeared in The Edge Financial Daily, on April 24, 2015.