KUALA LUMPUR (May 30): Ahmad Zaki Resources Bhd's (AZRB) first-quarter net profit rose 45.7% to RM6.12 million from RM4.2 million a year ago, on improved margin of construction projects, as well as the inclusion of contribution from the International Islamic University Malaysia (IIUM) Medical Centre facilities management concession.

Earnings per share also grew to 1.26 sen in the three months ended March 31, 2017 (1QFY17) from 0.87 sen in 1QFY16.

Quarterly revenue, however, fell 19.1% to RM250.19 million from RM309.37 million, largely due to a dip in revenue of the construction division which was mitigated by higher property revenue.

As at March 31, 2017, AZRB's construction segment has an outstanding orderbook of RM3.7 billion, which is slated to be completed over the next four years.

"We made good progress in our various ongoing construction projects and would double up our efforts in subsequent quarters to ensure timely delivery," AZRB group managing director Datuk Seri Wan Zakariah Wan Muda said in a statement today.

Revenue from the construction division in 1QFY17 amounted to RM228.7 million versus RM296.1 million in 1QFY16. Despite the drop, pre-tax profit from the division rose 19.3% to RM10.8 million from RM9.1 million previously, owing to favourable margin of certain projects.

"Aside from this, we have seen very promising signs that bode well for the group going forward, chiefly our plantation division managing to narrow our operational losses on account of the commencement of the palm oil mill in February 2017.

"This places the division on track to break-even by the end of the year and we are optimistic of continued improvements in the years to come," Wan Zakariah added.

The plantation division commissioned its 60-metric-tonne-per-hour palm oil mill in February, which is capable of producing crude palm oil and palm kernel. During 1QFY17, the division also saw an increase in fresh fruit bunches produced, which helped it to achieve a positive gross profit for the first time.

However, the division's pre-tax loss widened to RM6.6 million in 1QFY17 from RM4.6 million a year ago, due to lower foreign exchange gains, as well as higher depreciation and amortisation costs for the mill and planting expenditures.

AZRB's property division's pre-tax profit increased more than 20 times to RM7.8 million in 1QFY17 from RM400,000 in 1QFY16, due to the new IIUM facilities management services which came in mid-2016.

The oil and gas division continued to see lacklustre activities in the sector, incurring a pre-tax loss of RM600,000 on revenue of RM9.1 million. The loss was compounded by the increased expenses from the newly-acquired Tok Bali Supply Base in Kelantan, which has yet to reach optimal operations levels.

On future prospects, Wan Zakariah said the group remains optimistic of the construction sector as more infrastructure projects in the country have yet to be implemented.

"With the government intending to undertake many major projects such as the East Coast Rail Link, the Kuala Lumpur-Singapore High Speed Rail, the mass rapid transit 3 and light rail transit 3, we hope to leverage on our expertise and track record to tap into the opportunities. At the same time, we will continue to fine tune our other business segments to enhance efficiency and profitability," he said.

AZRB shares closed down 2 sen or 1.17% at RM1.11 today, with 779,500 shares traded, bringing it a market capitalisation of RM568.75 million. — theedgemarkets.com

For more stories, download TheEdgeProperty.com pullout here for free.

SHARE
RELATED POSTS
  1. ECRL completes excavation of 30 tunnels ahead of schedule
  2. MRL establishes Sukuk Murabahah programme up to RM10.21b to finance ECRL project
  3. ECRL seen contributing 3.8% increase to Malaysia’s GDP by 2047 – Zafrul