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Hap Seng Consolidated 3Q net profit up 1.3% y-o-y, pays 20 sen dividend

KUALA LUMPUR (Nov 22): Hap Seng Consolidated Bhd has eked out a 1.28% year-on-year growth in net profit to RM193.14 million or 7.76 sen a share in the third quarter ended Sept 30, 2019 (3QFY19), on the back of slightly higher revenue from its plantation, property and credit financing divisions.

Quarterly revenue was inched up 3.61% to RM1.83 billion versus RM1.76 billion in the same period last year, according to a filing with the local stock exchange yesterday. The group declared a second interim dividend of 20 sen per share, for the financial year ending Dec 31 2019 (FY19), payable on Dec 18.

In addition to improved crude palm oil and palm kernel sales volume, higher revenue was also contributed by its property development and construction activities, sale of non-strategic properties, as well as better performance from its investment properties segment.

Hap Seng said its credit financing division’s loan base in the quarter was RM3.86 billion, 2% above last year’s RM3.79 billion, while its non-performing loans ratio improved to 1.62%, compared with 1.68% before.

For the cumulative nine months (9MFY19), its net profit shrank by half to RM480.91 million or 19.32 sen per share, from RM989.36 million or 39.74 sen per share last year, despite a 10.41% increase in revenue to RM5.32 billion, from RM4.82 billion.

Lower earnings for the nine-month period was due to a one-off gain of RM516.02 million from the disposal of HSC Sydney Holding Ltd last year.

However, the group is optimistic of achieving satisfactory results for FY19.

Palm oil prices are expected to improve moving forward, on the back of the implementation of biodiesel mandates of B20 and B30 in Malaysia and Indonesia respectively, which is expected to tighten global palm oil supply in 2020. Demand for fertilizers is also expected to improve, in tandem with improvement in CPO prices.

However, it cautioned business environment for both its premium passenger vehicle and commercial vehicle segments, is expected to remain competitive and challenging, given cautious consumer spending.

Hap Seng shares closed down two sen or 0.2% to RM9.93 yesterday, valuing the company at RM24.72 billion.

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