O&C Resources returns to the black on higher construction revenue

KUALA LUMPUR (Dec 15): Loss-making condom and baby care accessories manufacturer O&C Resources Bhd (OCR) has returned to the black for the first quarter ended Oct 31, 2016 (1QFY2017) compared to the immediate preceding quarter thanks to higher revenue in its construction business segment.

The group, which diversified into property development and construction in December 2015, recorded a pre-tax profit of RM300,000 in 1QFY2017, as against a pre-tax loss of RM2.9 million in 4QFY2016.

However, its 1QFY2017 net profit of RM288,000 or 0.12 sen a share is lower by 31.91% compared with RM423,000 or 0.21 sen a share in 1QFY2016, due to higher administrative costs. Revenue rose 13.41% to RM11.96 million from RM10.54 million.

OCR, formerly known as Takaso Resources Bhd, said in its filing with Bursa Malaysia that there was a RM1.7 million increase in its construction revenue compared with 1QFY2016 as a result of higher revenue recognition from a construction contract.

“Based on our forecast, looking at our calendar year, not financial year, we should be able to make profits in 2017,” chief financial officer Bernard Tan added when speaking to reporters after the group’s annual general meeting yesterday.

As for FY2017, Tan said OCR should be able to break even.

He said the group will be engaged in the construction of Perbadanan PR1MA Malaysia (PR1MA) affordable housing projects from the next quarter onwards. The group is involved in launching 25,000 units of PR1MA homes in Pahang.

OCR will also be launching its Yap Kwan Seng high-end property project (with a gross development value of RM206 million) by January.

Tan said the group is expecting a 60% revenue contribution from the construction and property development segments, with the remaining 40% coming from its manufacturing segment for next year.

Currently, revenue contribution from the construction segment is 15% and there is no revenue recognition for the property development segment.

This article first appeared in The Edge Financial Daily, on Dec 15, 2016. Subscribe to The Edge Financial Daily here.