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Ho Hup's 1Q profit triples as mall sale boosts its property development segment

KUALA LUMPUR (May 28): Ho Hup Construction Company Bhd's net profit for the first quarter ended March 31, 2020 (1QFY20) tripled to RM15.85 million from RM5.3 million in the same quarter a year ago as the group's earnings were lifted by higher property development contribution.

Its property development segment's profit jumped more than three times to RM23.17 million from RM6.84 million previously, as it recognised proceeds from the sale of the Pavilion Bukit Jalil Mall and progressive sale of its Kota Kinabalu Crown development units. It also recognised progressive billings from Phase 2 Park Residence.

The segment's revenue, which more than tripled to RM67.93 million from RM20.92 million, lifted the group's overall revenue by 90% to RM80.3 million from RM42.36 million, its stock exchange filing yesterday showed.

The jump in the property development segment's revenue more than offset the 53% or topline decline to RM4.13 million at its building material segment, and the 59% fall in its construction revenue to RM11.03 million.

Both these segments were also loss-making during the quarter, with building material chalking a loss of RM1.29 million — marginally more than RM1.13 million a year ago — while its construction recorded a loss of RM2.17 million versus a profit of RM1.72 million previously.

The weaker building material segment was due to slower progress for rehabilitation works at Besut and lower demand for rocks at the project site.

As for the construction segment, it was affected by the slower progress of work at the Besut bridges at Teluk Intan, as well as the Yong Keng Peng road project and the Technical Vocational College (TVET) in Kulai.

Notwithstanding the stronger 1Q earnings, Ho Hup's board expects the remaining FY20 to be challenging in view of the Covid-19 pandemic.

"Accordingly management is taking timely actions to realign project activities to market demand, in order to protect its profitability,” Ho Hup said.

Ho Hup shares finished 0.86% or half a sen lower at 58 sen, valuing it at some RM239.18 million.

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