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KUALA LUMPUR (Aug 21): Highway construction company WCE Holdings Bhd booked its fifth consecutive quarterly loss with RM30.89 million for the first quarter ended June 30, 2020 (1QFY21), mainly attributed to the recognition of interest expense of RM40.3 million under its toll concession segment, in respect of the financing costs for the West Coast Expressway on the sections which are completed and open for traffic.
In a bourse filing, WCE said its finance costs jumped to RM41.02 million compared with RM3.05 million in 1QFY20.
It added that earnings were also dragged by the share of loss of RM300,000 from its associates in 1QFY21 compared with a share of profit of RM8 million a year ago, impacted by the temporary halt in construction activities in the Bandar Rimbayu development as a result of the implementation of the Movement Control Order.
On a quarter-to-quarter basis, the company recorded a widened net loss versus a net loss of RM11.99 million for 4QFY20. Its quarterly revenue also fell sharply, down 63.34% to RM44.53 million from RM121.47 million.
In contrast, the company posted a net profit of RM9.23 million for the corresponding quarter a year ago (1QFY20). Revenue plunged 88.38% against RM383.19 million a year ago, according to a filing with Bursa Malaysia.
WCE's project involves the development of a 233km tolled highway (West Coast Expressway) from Banting, Selangor to Taiping, Perak and it is being built on a build-operate-transfer basis, with a concession period of up to maximum of 60 years.
The project is divided into 11 sections and four sections have been opened for traffic and commenced tolling. Section 8 (Hutan Melintang — Teluk Intan) was opened for traffic on May 31, 2019, followed by section 9 (Kampung Lekir — Changkat Cermin) and 10 (Changkat Cermin — Beruas) on Sept 23, 2019 and section 5 (Bandar Bukit Raja — Kapar) was opened on Dec 10, 2019.
On prospects, the group expects to incur losses in early years of its toll operations due to cessation of capitalisation of interest expenses for completed sections and the non-cash expenditure in respect of the amortisation of infrastructure development expenditure.
Nevertheless, it said the commencement of toll operations of the West Coast Expressway is expected to improve the future financial performance of the group in terms of cash flow and is expected to provide the group a stable recurrent income over the concession period.
On property development, it said the property market will remain challenging despite improving consumer sentiment, mainly impacted by issues such as price affordability, overhang of highly priced properties, rising costs of living, tight financing and economic impact of Covid-19.
At noon break, WCE's share price was up 0.5 sen or 1.85% at 27.5 sen, after some 351,500 shares were done.
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