MRCB returns to the black in 2Q with RM14.1 mil net profit as operations normalise

• MRCB added that the strong set of earnings was further boosted by the construction progress of the Light Rail Transit 3 (LRT3) project, despite shortages in labour and key building materials.

KUALA LUMPUR (Aug 30): Malaysian Resources Corp Bhd (MRCB) swung back to the black in the second quarter ended June 30, 2022 (2QFY22) with a net profit of RM14.1 million compared with a net loss of RM32.42 million a year earlier, hoisted by the normalisation of its operations, which resulted in increased revenue and profit recognition from construction progress.

The group's revenue for the quarter leapt more than three-fold to RM700.39 million from RM225.75 million, according to its Bursa Malaysia filing on Tuesday (Aug 30).

MRCB added that the strong set of earnings was further boosted by the construction progress of the Light Rail Transit 3 (LRT3) project, despite shortages in labour and key building materials.

"Operating profits were mainly derived from the LRT3 project, which reached physical construction progress of 74% and financial progress of 67% at the end of June 2022.

"Additional contributions also came from the sale of completed unsold inventories and ongoing property development projects, namely Sentral Suites in KL Sentral, the 9 Seputeh mixed residential developments in Jalan Klang Lama and Alstonia in Bukit Rahman Putra," it said.

MRCB noted that its 27.94%-owned Sentral REIT and associated company Sentral REIT Management Sdn Bhd contributed a combined lower profit after tax of RM8 million from RM9.4 million last year.

For the cumulative first half ended June 30, 2022 (1HFY22), MRCB posted a net profit of RM28.14 million compared with a net loss of RM27.21 million, while revenue more than tripled to RM1.51 billion from RM452.46 million.

The bulk of the group's revenue came from the engineering, construction and environment division which chalked up RM1.15 billion in revenue compared with RM156.4 million last year, mainly due to the improved operating conditions.

The division's operating profit came in at RM55.7 million in 1HFY22 versus a net loss of RM32.98 million last year, largely due to the LRT3 project.

Meanwhile, its property development and investment division's operating profit jumped over two-fold to RM43.18 million from RM16.46 million, largely due to ongoing property development projects achieving higher construction progress.

"As at June 30, 2022, two of the group's largest property development projects, [Sentral Suites reached construction progress of 75% while TRIA 9 Seputeh reached construction progress of 80%,] and will continue to contribute revenue and profit as sales improve and construction progresses," it said, noting that the division recorded RM331.9 million in revenue compared with RM274.92 million.

Going forward, MRCB said its engineering, construction and environment division's long-term order book will ensure the group has a steady pipeline of contracts to sustain its business over the long term.

"As at June 30, 2022, the external client order book stood at RM27.2 billion, while the unbilled portion was RM18.4 billion," it said, noting that the division's open tenders stood at RM35 million.

In terms of its property development and investment division, the group said its immediate priority in FY22 is enhancing cash flow by monetising its inventory of unsold completed stock — which stood at RM349 million.

"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.

Shares in MRCB finished up half a sen or 1.45% at 35 sen, giving it a market capitalisation of RM1.54 billion.