KUALA LUMPUR (Aug 3): Bina Darulaman Bhd's net profit for the second quarter ended June 30, 2017 (2QFY17) slumped 83.4% to RM433,000 from RM2.61 million in 2QFY16 due to lower profit contribution from its property development and construction businesses.

Quarterly revenue, however, increased 14.73% to RM78.95 million in 2QFY17 from RM68.81 million in 2QFY16, thanks to higher contribution by its quarry and road pavement division, which recently bagged road maintenance projects.

The Kedah-based property development firm had in June 2015 secured an RM209.9 million contract from the Public Works Department of Kedah to maintain state roads in 10 districts in Kedah for three years, which commenced on June 10, 2015 and ends on June 10, 2018.

As for its property development division, Bina Darulaman said the division recorded a pre-tax loss of RM562,481 in 2QFY17 compared with a pre-tax profit of RM248,814 in 2QFY17, while division revenue dropped 47% to RM23.1 million from RM43.7 million a year ago.

The drop in both segment revenue and profit, said Bina Darulaman, was mainly due to lower recognition of its on-going medium-cost to high-end residential projects at Bandar Darulaman and Darulaman Perdana since most of the projects are nearing completion.

As for its construction division, Bina Darulaman said segment revenue recorded better performance, mainly due to higher external projects like 11 water treatment plants owned by Syarikat Air Darul Aman Sdn Bhd and Projek Perumahan Rakyat Ayer Hitam, which it had undertaken in 2QFY17.

However, Bina Darulaman said the profit contribution from the construction division decreased by RM3.8 million in 2QFY17, as it suffered from the loss of interest income due from Kolej Universiti Insaniah in Kedah, arising from the early settlement of project financing.

For the cumulative six months ended June 30, 2017 (6MFY17), Bina Darulaman said net profit plunged 85.47% to RM716,000 from RM4.93 million a year ago, on lower property sales.

Despite lower earnings, Bina Darulaman said it managed to record a 23.66% growth in revenue to RM142.81 million in 6MFY17 from RM115.49 million in 6MFY16, boosted by early commencement of the state road maintenance project, coupled with external construction jobs.

On prospects, Bina Darulaman said its core businesses, particularly the property development, are expected to record “respectable performance” for the financial year ending Dec 31, 2017 (FY2017), premised on its “adequate land bank” and projects in hand to provide sustainable revenue in the future.  

“The property division should be able to maintain its contribution from Bandar Darulaman, Darulaman Perdana and Darulaman Utama which includes affordable housing projects,” Bina Darulaman said in a filing with Bursa Malaysia today.

Bina Darulaman added that in FY2017, its wholly-owned BDB Land Sdn Bhd is planning to launch two new townships in Kedah — Darulaman Saujana and Darulaman Putra — whereas Kedah Holdings Sdn Bhd has launched its pocket development project in Kuala Kangsar, Perak, its first property development project outside Kedah.

As for its Road and Quarry Division, Bina Darulaman said the profit contribution from this division is expected to “remain stable” based on the demand for quarry products and the progress of on-going road pavement projects.

“The division also expects a steady flow of income from the State Road Maintenance (SRM) project,” it added.

Meanwhile, Bina Darulaman noted that its construction division will continue to support its property arm in developing affordable houses during the year.

“In addition, two key projects namely PPR housing scheme under Kementerian Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan and also water treatment plant for SADA will be the key contributors to revenue and profit,” the firm said, noting that the division will also be focusing on completion and delivering these projects within the stipulated time, budget and quality.

Shares in the Main Market-listed Bina Darulaman declined 0.5 sen or 0.76% to close at 65 sen yesterday, giving it a market capitalisation of RM197.51 million. — theedgemarkets.com

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