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MRCB’s quarterly profit falls 68% amid multiple construction site closures in 1Q

KUALA LUMPUR (May 31): Malaysian Resources Corp Bhd (MRCB)’s net profit for the first quarter ended March 31, 2021 (1QFY21) fell 67.68% to RM5.2 million from RM16.09 million a year ago, due to the suspension of work on several projects following the detection of Covid-19 infections at the construction sites.

Group revenue fell 46.75% to RM226.71 million from RM425.75 million, its filing to Bursa Malaysia showed. The group did not declare any dividend for the latest quarter. On a quarter-on-quarter basis, the group’s net profit was down 80.52% from RM26.9 million in 4QFY20, while revenue fell 26.61% from RM308.92 million.

The year-on-year decline in quarterly revenue and profit was due to the residual impact of multiple site closures at several construction project sites that were undertaken as a precautionary measure when Covid-19 cases were detected towards the end of 2020, MRCB said.

“While this hampered construction progress at the end of 2020, the impact continued into the period under review, due to the resultant impact to construction progress and billings,” it said.

It also said that the lower revenue and profit recorded in 1QFY21 was due to the reimposition of the Movement Control Order (MCO) in the last two weeks prior to March 31.

In addition to these setbacks, it said most of the group’s key construction projects are nearing completion, where recognition of revenue and profits are minimal.

Going forward, the group believes the outlook for the property market will remain challenging for the foreseeable future. Its immediate priorities for property development and investment division in 2021 remain on enhancing cashflow by monetising its inventory of unsold completed stock, which stood at RM450.9 million on March 31, 2021.

However, it said sales are likely to remain subdued due to the general Covid-19 environment, more stringent movement controls and the closure of borders, which has impacted access to foreign markets that have been a source of sales for both VIVO 9 Seputeh and Sentral Residences.

“In the meantime, the group will continue to closely monitor conditions in the broader economy and property market, revising its strategies and financial targets accordingly, including reviewing its future launches if conditions dictate,” it said.

With interests in 323 acres of urban land, the group said it has a sustainable supply of land for future projects over the long term, with a total gross development value of RM32 billion.

As for the engineering, construction and environment division, it said it continues to actively tender for more infrastructure contracting projects to replenish its order book, but noted there have been no new large projects put out to tender.

The division had tendered for projects valued at RM2.14 billion as at March 31, 2021, but many of these tenders have subsequently been delayed or postponed indefinitely due to the pandemic.

“As at March 31, 2021, the external client order book stood at RM21.7 billion, and this will ensure that the division has a steady pipeline of contracts to sustain its business over the very long term, but with no infrastructure projects being tendered out, the short term to medium term outlook remains challenging,” it added.

MRCB shares closed 1.5 sen or 3.37% lower at 43 sen today, valuing the group at RM1.92 billion.

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