Boustead 2Q net profit surges 77 times

KUALA LUMPUR (Aug 25): Boustead Holdings Bhd saw its second-quarter net profit jump more than 77 times to RM225.8 million or 13.52 sen a share, from RM2.9 million or 0.18 sen a share a year ago, mainly due to gains realised on the disposal of its 30% stake in associate Jendela Hikmat Sdn Bhd for RM180 million and the sale of non-core plantation lands amounting to RM118 million.

“Most of our divisions also performed well, despite the challenging economic climate. This clearly demonstrates the group’s resilient focus on unlocking value within our business units, while leveraging on the strength of our diversified nature,” Boustead deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin said in a statement yesterday.

Revenue for the three months ended June 30, 2016 (2QFY16), however, fell 6.3% to RM2.07 billion, from RM2.21 billion in 2QFY15.

Boustead also declared a second interim dividend of 4 sen for the financial year ending Dec 31, 2016 (FY16), payable on Sept 30. Due to the group’s enlarged share capital as a result of the rights and bonus issues earlier this year, total dividends to be paid out will amount to RM81 million.

For the cumulative six months (1HFY16), net profit rose 68 times to RM204.3 million or 12.34 sen a share, from RM3 million or 0.18 sen a share a year ago, while revenue dropped 4.2% to RM3.93 billion, from RM4.1 billion in 1HFY15.

Lodin pointed to the property division, which was the biggest contributor with a higher profit of RM201 million for 1HFY16, on the back of a gain on disposal of its associate company Jendela Hikmat. However, this was mitigated by a weaker performance by the hotel segment and unrealised foreign exchange loss.

In a filing with Bursa Malaysia yesterday, Boustead said first-half revenue was dragged down by lower contribution from its heavy industries division, which fell 13% year-on-year (y-o-y), mainly due to weaker turnover from the air transportation segment.

Its property division’s revenue for 1HFY16 also fell 17% y-o-y on lower progress billings, while the trading and industrial division’s turnover was 9% lower than 1HFY15 mainly due to weaker fuel price.

On prospects, Boustead said the remainder of FY16 is expected to be challenging, both globally and domestically, due mainly to uncertainties surrounding global economy, direction of energy prices, Brexit impact and other geopolitical risks. On the domestic front, weak commodity prices and slower domestic consumption may impede growth.

“Nevertheless, the prospect remains positive as the Malaysian economy is well supported by underlying strong economic fundamentals, sound financial system, accommodative monetary policy, as well as the implementation of various government initiatives. The diversified nature of Boustead’s business in six segments of the economy would augur well for the group,” it said.

Boustead shares closed up two sen or 0.9% to RM2.25 yesterday, bringing a market capitalisation of RM4.58 billion.

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This article first appeared in The Edge Financial Daily, on Aug 25, 2016. Subscribe to The Edge Financial Daily here.