MKH Bhd 2Q profit jumps 58% on disposal gain as Batu Kawan launches RM550m takeover

PETALING JAYA (May 23): MKH Bhd posted a 58% jump in net profit for its second quarter ended March 31, 2026, despite a sharp decline in revenue, as a one-off disposal gain from its China furniture business offset weaker contributions from its property development and plantation segments.

Net profit attributable to shareholders rose to RM28 million from RM17.7 million a year earlier, whilst revenue fell 32.3% to RM148.6 million from RM219.6 million, according to the group's Bursa Malaysia filing yesterday.

The stronger bottom line was mainly driven by a RM26.3 million gain from the disposal of Vast Furniture Manufacturing (Kunshan) Co Ltd to China-based Kunshan Meiao New Energy Technology, which was completed in January 2026.

Based on the reported figures, profit before tax excluding the disposal gain would have been about RM12.4 million, versus RM32.6 million a year earlier, reflecting weaker contributions from both its Malaysian property development arm and Indonesian plantation business.

For the six-month period ended March 31, 2026, revenue declined 31.2% to RM321.7 million from RM467.9 million previously, whilst profit before tax dropped 37.9% to RM53.2 million from RM85.7 million.

Property development slips into loss amid project delays

MKH's property development division recorded a loss before tax of RM9.8 million for the first half of FY2026, compared with a profit before tax of RM12.1 million a year earlier, as segment revenue tumbled 37.3% to RM134.9 million.

The group attributed the decline mainly to work delays at its TR2 Residence Jalan Tun Razak project arising from contractor-related issues. Revenue recognition was also affected as newly launched developments — including Residensi Naluri, Gaya Residency and MKH Avenue 2 — remain in early construction stages.

Despite weaker current earnings recognition, MKH's unbilled sales stood at RM443.9 million as at March 31, 2026, providing earnings visibility for upcoming quarters.

The unbilled sales comprised RM154.2 million from TR2 Residence Jalan Tun Razak, RM167 million from Residensi Naluri, RM87.3 million from Gaya Residency, RM22.3 million from Kajang 2 Precinct 3 Avenue, and RM13.1 million from MKH Avenue 2.

Mixed take-up rates across projects

MKH's flagship TR2 Residence Jalan Tun Razak project achieved a 90% take-up rate for its 918 units, with a gross development value (GDV) of RM506 million.

Residensi Naluri recorded a 66% take-up rate for its 733 apartment units, carrying a GDV of RM230.2 million, whilst its retail component achieved full take-up with a GDV of RM30.5 million.

At Gaya Residency, Tower C achieved a 57% take-up rate for its 494 units with a GDV of RM165.5 million. However, the project's retail shops recorded only 8% take-up for units worth RM60.6 million in GDV.

Kajang 2 Precinct 3 Avenue fully sold all 33 shop units, representing a GDV of RM33.8 million.

Meanwhile, MKH Avenue 2 — launched in March 2026 — has achieved only an 11% take-up rate for its 50 shop units, which carry a GDV of RM120.3 million.

The slower take-up rates for some commercial components indicate more cautious demand in selected retail and commercial segments.

Plantation earnings pressured by lower CPO sales and weaker rupiah

MKH's plantation division, which contributed 43.8% of total group revenue at RM140.9 million, saw profit before tax fall 51.9% to RM33.3 million.

The decline was attributed to lower crude palm oil (CPO) sales volume of 33,807 metric tonnes versus 44,919 metric tonnes previously, alongside weaker average selling prices and shipment delays that deferred sales of 3,000 metric tonnes of CPO into April 2026.

The Indonesian rupiah's depreciation also created unfavourable foreign exchange translation effects, with the exchange rate weakening to RM1:IDR4,216 compared with RM1:IDR3,745 a year earlier.

The weaker performance was partly mitigated by stronger crude palm kernel oil sales, which rose to 3,700 metric tonnes from 1,858 metric tonnes previously.

Batu Kawan launches RM550m takeover move

Separately, Batu Kawan Bhd announced on May 20 a takeover move for MKH through its subsidiary Whitmore Holdings.

The exercise involves an unconditional acquisition of 170.4 million shares, representing a 29.6% stake, for RM340.9 million, and a conditional acquisition of 104.4 million shares, representing an 18.1% stake, for RM208.9 million.

Both transactions are priced at RM2 per share.

The combined acquisitions would give Batu Kawan a 47.7% stake in MKH for a total consideration of RM549.8 million.

Upon completion of the conditional acquisition, Batu Kawan will be required to undertake a mandatory general offer (MGO) for the remaining MKH shares under takeover rules.

Batu Kawan is part of the Kuala Lumpur Kepong Bhd group. The proposed acquisition comes amid ongoing consolidation within Malaysia's property and plantation sectors.

RM432m launches planned for FY2026

Looking ahead, MKH plans to launch projects with a combined GDV of RM432 million in FY2026, including Annya Kajang 2 Precinct 3 Phase 3, Residensi Pinang Hillpark Shah Alam, Residensi Naluri Block C and Gaya Residency Tower B.

The group said it expects "moderate expansion" in its property development business, supported by stable monetary conditions and continued economic growth.

For its plantation operations, the company said current CPO prices of between RM3,500 and RM3,700 per metric tonne — net of Indonesian export levy and duty — remain supportive.

The board expects the group to deliver "satisfactory results" for FY2026.

MKH's net assets per share remained unchanged at RM3.26 as at March 31, 2026, whilst the group held cash and cash equivalents of RM613.4 million against total borrowings of RM451.2 million.

The company did not declare any dividend for the current quarter.

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