Kimlun returns to the black in 2Q from a year ago, but profit drops q-o-q on FMCO effect

KUALA LUMPUR (Sept 20): Kimlun Corp Bhd's net profit fell 74% to RM2.38 million in its second quarter ended June 30, 2021 (2QFY21) from RM9.12 million in the immediate preceding quarter of 1QFY21, despite higher revenue, as the imposition of the Full Movement Control Order (FMCO) affected some of its major business operations.

Group revenue rose quarter-on-quarter (q-o-q) to RM214.33 million from RM210.28 million, its stock exchange filing showed. "Gross profit was lower in 2QFY21 compared with in 1QFY21 as the gross profit generated from the Bukit Bayu Project was insufficient to offset the decline in gross profits of other major business divisions. The decline in revenues and gross profits of other major business divisions was mainly due to the near total shutdown of the construction operation and substantially reduced M&T operation in June 2021," it said.

However, on a year-on-year basis, Kimlun returned to the black against a net loss of RM9.74 million it incurred in 2QFY20, as revenue jumped 128% from RM94 million, supported by higher contributions from all its major business divisions, its bourse filing with Bursa Malaysia showed.

Its construction segment's revenue more than doubled to RM134.17 million from RM65.72 million a year ago, while manufacturing and trading's revenue grew 67.2% to RM62.76 million from RM37.55 million.

"Construction and manufacturing and trading divisions achieved a higher revenue in the period under review as the group was able to operate for a longer period during the current quarter and period. The total lockdown under the FMCO resulted in near total shutdown of the construction operation and substantially reduced manufacturing and trading operation for one month during the period under review vis-à-vis two months of near total shutdown of all business operations in year-to-date (YTD) 2020 under MCO 1.0," it said.

Its property development division recognised a revenue of RM43.8 million in 2QFY21 compared with none in the previous year, attributable to sales achieved from the Bukit Bayu, Seksyen U10, Shah Alam project.

For the first half (1HFY21), its cumulative net profit stood at RM11.5 million versus a net loss of RM3.14 million recorded during the January-to-June period previously. Cumulative six-month revenue grew 25.13% to RM424.61 million from RM339.34 million previously.

The company also noted that order book replenishment opportunities in year 2020 and YTD 2021 were substantially reduced due to postponements in the awarding of some Singapore public sector projects, and developers delaying or cancelling their planned roll-outs of new projects amid a market dampened by weak sentiment.

"This is expected to result in the temporary downward trend of the group's revenue," it said.

As at June 30, 2021, the group had an estimated construction and manufacturing balance order book of approximately RM800 million and RM300 million respectively, which will contribute to the group's revenue for about two years.

The group said it will continue to bid for projects and expects some tender opportunities from the public sector, which include phase two of the Pan Borneo Highway Sarawak and the Johor-Singapore Rapid Transit System, as well as hospital and affordable housing projects.

For its property development division, it plans to launch two projects in 2HFY21, one involving 16 bungalow units under phase two of the Bukit Bayu project with an estimated gross development value (GDV) of RM37 million, and another involving 60 semi-detached houses in Bandar Seri Alam, Johor with an estimated GDV of RM61 million.

Kimlun shares closed down 2.5 sen or 3.05% to 79.5 sen today, for a market capitalisation of RM281 million.

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