KUALA LUMPUR, Nov 21 — Hap Seng Consolidated Bhd reported a drop of 91 per cent in net profit to RM50.30 million in the third quarter ended Sept 30, 2023 (3Q FY2023) from RM563.75 million a year ago.
Revenue was 22 per cent weaker at RM1.54 billion from RM1.97 billion due to lower revenue from all divisions except credit financing and building materials divisions.
In a filing with Bursa Malaysia today, it said operating profit slipped 31 per cent to RM172.6 million amid weaker profit contributions from property, credit financing, automotive and trading segments, but mitigated by higher profit contributions from plantation and building materials divisions.
Hap Seng said the building materials division saw revenue increasing by 33 per cent to RM256.6 million from the preceding year’s corresponding quarter of RM192.3 million with higher contributions from both its Singapore-listed Hafary Holdings Ltd as well as the quarry, asphalt and bricks businesses.
Hafary’s revenue was 40 per cent higher than the preceding year’s corresponding quarter, benefitted from the higher project and general sectors’ sales in tandem with the active construction and renovation sectors in Singapore, and the contribution from its Malaysian operations following the reorganisation of the tiles business from the building materials division.
Revenue from quarry, asphalt and bricks business was 12 per cent higher boosted by higher sales volume and improved average selling prices of aggregate products in both its markets in Malaysia and Singapore.
The credit financing division’s revenue was slightly affected to end the quarter at RM57.1 million from RM57.3 million in 3Q FY2022, benefitted from the reversal of interest in suspense with the continuing normalisation of loans under the Syarikat Jaminan Pembiayaan Perniagaan (SJPP) Guarantee Scheme.
However, the loan base at the end of the current quarter was 12 per cent lower, at RM2.53 billion, dragged down by lower disbursements and also the divestment of its Manchester operations in the United Kingdom via HS Credit (Manchester) Ltd.
The plantation division’s revenue for 3Q FY2023 declined 10 per cent to RM164.6 million, dragged down by the lower average selling price but mitigated by higher sales volume of crude palm oil (CPO) at 36,726 tonnes, 18 per cent above the same period last year.
Palm kernel (PK) sales volume was 25 per cent higher at 8,167 tonnes, which benefitted from higher production.
The average selling price of CPO and PK were RM3,924 per tonne and RM2,142 per tonne respectively, both lower than the preceding year’s corresponding quarter of RM5,219 per tonne for CPO and RM2,543 per tonne for PK.
The division also benefitted from a gain from fair value adjustments of biological assets of RM15 million compared to a loss of RM24.2 million.
Meanwhile, revenue for the property segment declined 12 per cent to RM128.8 million following lower sales mainly in both East and Peninsular Malaysia projects.
Hap Seng said the automotive division’s revenue for the quarter dipped 33 per cent to RM315.6 million, affected by lower sales from both its passenger car and commercial vehicle segments.
In comparison, revenue for the trading unit shrank 30 per cent to RM726.9 million with lower revenue from both its fertilisers and general trading businesses.
For the nine months, net profit slipped to RM762.96 million from RM852.63 million on the back of a revenue of RM4.78 billion, lower from RM5.32 billion previously.
The group said that based on the foregoing, it is cautiously optimistic about achieving satisfactory results for the financial year ending December 31, 2023.
It expects the quarry, asphalt and bricks business to continue to benefit from the ongoing major projects in East Malaysia and Brunei.
In Singapore, Hafary is expected to benefit from the residential properties resale market which is anticipated to remain relatively stable in the fourth quarter of this year and the launch of build-to-order flats by the Housing Development Board.
“The credit financing division remained cautious in the approval of new loans as it expects the economic conditions to remain challenging given higher interest rates, inflationary pressures and economic uncertainties surrounding its financing sectors.
“The division will constantly review its lending policies to manage operational risks and be vigilant to changes in the economic and financing landscapes surrounding its business,” it noted.
With production costs expected to remain high due to inflationary pressures and the high prices of fertiliser, diesel and other input materials as well as higher labour costs, the group said the plantation segment will continue to put concerted efforts to improve the overall efficiencies and practice good plantation husbandry to improve yield and extraction rates to mitigate unit production cost. — Bernama
