TA Enterprise 2Q earnings up on hotel division

KUALA LUMPUR: TA Enterprise Bhd (TAE) saw its net profit more than doubled to RM26 million for the second quarter (2Q) ended July 31 from RM10.4 million in the previous corresponding period, boosted by its hotel division.

Revenue was up 9% to RM156 million from RM143.5 million before.

For the six months ended July 31, TAE’s net profit soared 81% to RM59.96 million from RM33 million a year earlier. The 1H revenue grew 15.7% year-on-year (y-o-y) to RM330.72 million from RM285.9 million previously.

The improved earnings were mainly contributed by TAE’s 73.4%- owned TA Global Bhd which runs the group’s hotel division.

In its results announcement yesterday, the group noted that its hotel division contributed 60% to its 1H revenue. Its broking and financial services division was the second biggest revenue contributor with RM67.97 million.

However, quarter-on-quarter, the hotel division posted lower gains of RM84.73 million in 2Q compared with RM115.67 million in 1Q.

On a group level, net profits fell 17.9% to RM34.41 million for 2Q from RM41.91 million in 1Q.

“The decrease in the group’s profit was mainly due to the decrease in contribution from stockbroking and TA Global’s property development and hotel division,” TAE said.

Revenue also slipped 10.7% to RM156 million in 2Q against  RM174.72 million in 1Q.

Interestingly, there was a sizeable increase in net cash used by the group in its investing activities to RM131.95 million for 1HFY12 from RM11.43 million for 1HFY11.

Moving forward, the group said it sees a potential softer growth in the hotel division’s revenue due to the worldwide slowdown and moderating growth in Asia.

This is particularly important as TA Global’s hospitality divisions are mostly in overseas locations, including Australia, Singapore, Canada and China.

TA Global’s overseas properties have a gross development value (GDV) of RM1.94 billion (Australia) and RM631 million (Canada).

The group expects a “satisfactory” performance for the rest of FY12 ending Jan 31.

Its net assets value per share in 2QFY12 was 91 sen, higher than the value in 2QFY10 of 87 sen. TAE has lost 17% of its share price since Aug 4 and closed at 56.5 sen yesterday.