KUALA LUMPUR (Aug 30): Eastern & Oriental Bhd’s (E&O) net profit leapt by 6.6 times to RM21.24 million in the first quarter ended June 30, 2017 (1QFY18) from RM3.24 million a year ago, mainly contributed by property and investments as well as other segments.

However, the increase was dampened by higher finance costs and lower contributions from joint ventures. The property developer’s earnings per share rose to 1.66 sen in 1QFY18 from 0.26 sen a year ago.

Quarterly revenue also rose 6.2% to RM173.44 million in 1QFY18 from RM163.31 million in 1QFY17, on higher contributions from the property segment which saw higher revenue recognition from ongoing projects such as The Tamarind, the Amaris Terraces and the Ariza Seafront Terrace in Seri Tanjung Pinang (STP), Penang, as well as an increase in the sale of completed properties.

No dividend was paid during the current financial quarter. The quarter under review also saw the group initiating the disposal of the Lone Pine Hotel in Penang, in line with efforts to generate cashflow and reduce gearing.

“We continue to evaluate existing assets as part of ongoing efforts to monitor cashflow while maintaining a manageable gearing level,” it said in a filing with Bursa Malaysia yesterday.

On prospects, E&O said while property market conditions continue to be challenging, it has achieved encouraging take-up rates of its projects in STP. “Looking ahead, we are monitoring the market closely to [properly] time our new launches,” it added.

It also noted that reclamation of Seri Tanjung Pinang phase 2A (STP2A) is progressing well, with more than 75% of the island being reclaimed above the 2m chart datum level. “This will enable the application for titles and, subsequently, facilitate progressive payments from Kumpulan Wang Persaraan (Diperbadankan) (KWAP) for their purchase of land in STP2A,” said E&O. Earlier this month, E&O shareholders sanctioned the RM766 million sale of a portion in STP2A to KWAP.

“Going forward, we continue to pursue the sale of completed properties and the reclamation of STP2A in preparation for the launch of projects in 2019,” it added. E&O shares closed down four sen or 2.58% to RM1.51 yesterday, with a market capitalisation of RM2.01 billion.

This article first appeared in The Edge Financial Daily, on Aug 30, 2017.

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