OSK Holdings expects property development unit to be relatively quiet in 2018

KUALA LUMPUR (March 1): The property development segment, which dragged OSK Holdings Bhd’s fourth quarter net profit ended Dec 31, 2017 (4QFY17) by 20% to RM63.38 million, is expected to remain relatively quiet for 2018 due to fewer ongoing projects.

OSK Holdings, whose unbilled sales stood at RM1.1 billion as at Dec 31, 2017, said performance for the segment would be led by sales and progress billings from its existing projects and new projects launched in Malaysia.

In a statement today, the group said it launched Ryan & Miho in Section 13, Petaling Jaya in 4Q17 and Phase 1 of Iringan Bayu in Seremban in January 2018 with a combined gross development value of RM720 million.

“The Melbourne Square project in Australia continues to record strong take-up rate since its launch in June 2017. The share of profit from Melbourne Square would only be recognised once it is completed in accordance with the profit recognition criteria under MFRS 15 'Revenue from contracts with customers’,” it added.

The group has a landbank of 2,100 acres with a gross development value of RM8 billion.

Yesterday, OSK Holdings posted lower net profit from RM79.11 million in 4QFY16, as quarterly revenue fell 26.35% year-on-year to RM277.44 million from RM376.68 million. Earnings per share slipped to 3.05 sen from 3.81 sen a year ago.

The board proposed a single tier interim dividend of 3.5 sen for the financial year ended Dec 31, 2017 (FY17), bringing its total payout for the year to six sen as opposed to 7.5 sen last year.

For FY17, net profit surged 61.85% to RM400.22 million or 19.27 sen per share from RM247.27 million or 11.9 sen per share although revenue slipped 10.45% to RM1.17 billion from RM1.31 billion in FY16.

The construction segment propped the improved net profit performance with 69% increase in pre-tax profit due to higher progress billings for works carried out for both external and internal projects.

OSK Holdings said for FY18, it would continue to focus on delivering its current order books in a timely manner.

As at 31 December 2017, its outstanding order book stood at RM346 million.

It added that the property investment business is expected to contribute steady rental income from its commercial and retail tenants.

As for its industries segment, it anticipates satisfactory performance while tapping on private sector and government projects with the roll-out of major infrastructure projects.

“The government's proposal to make integrated building system compulsory for the construction industry creates an opportunity for us to tap into new customer bases and expand product types,” it added.

OSK Holdings said going forward, it is confident of delivering satisfactory results for FY18.

At 12.30pm, OSK Holdings dipped one sen or 0.96% to RM1.03 with 240,600 shares done, giving it a market capitalisation of RM2.14 billion. —

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