Gadang 1Q net profit slips 10% on lower property sales

KUALA LUMPUR (Oct 24): Gadang Holdings Bhd’s net profit for its first quarter ended Aug 31, 2019 (1QFY20) fell 10% to RM14.85 million from RM16.54 million in the year-ago quarter, dragged by lower property contribution.

This was despite a 14% rise in revenue to RM147.60 million from RM129.15 million, as it recognised higher work progress at its ongoing construction projects.

Higher revenue and profit were also recorded at its utility division, thanks to lower operating expenses and favourable foreign exchange translation effect in the current quarter.

Meanwhile, earnings at its property division contracted with lower sales registered during the quarter under review, Gadang’s exchange filing today showed.

Moving forward, Gadang said it will realign its new property launches to match market demand.

“Based on the total unbilled sales of RM126.50 million and the sales progress of the newly-launched townhouse project located in Putra Perdana, the division is expanding on its customer segments to drive sustainable growth,” the group said.

As for its construction division, Gadang plans to continuously bid for new infrastructure contracts to refresh its order book, and to better manage on its timely project execution.

As at the reporting date, Gadang has an outstanding order book of RM1.14 billion, which will be able to sustain its operation for the next two years.

“The board is cautiously optimistic that major construction initiatives such as the revival of the East Coast Rail Line project, Pan Borneo Highway project and the development of Bandar Malaysia infrastructure components, will be positive for the group,” Gadang said.

It also expects its utility division to continue contributing a sustainable recurring income stream from its concession water treatment assets, which upon the completion of the nine megawatt (mW) mini-hydro power plant under construction in Lintau, Sumatera, will further increase and strengthen its overall recurring income stream.

Shares of Gadang slipped one sen to finish at 66 sen apiece today, bringing a market capitalisation of RM480.52 million.

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