Hap Seng expanding auto biz in Sabah, Sarawak

KOTA KINABALU: Hap Seng Consolidated Bhd’s unit Hap Seng Star Sdn Bhd has budgeted RM30 million in investments this year and next to expand its automotive business in Sabah and Sarawak.
At a press conference yesterday in conjunction with the launch of Mercedes-Benz Hap Seng Star Kota Kinabalu Autohaus, Hap Seng group COO and Hap Seng Star CEO Harald Behrend said the investment is in line with an expected growth potential in Sabah and Sarawak.
“We won’t invest if we have no confidence in these markets,” he said, adding that sales have been increasing in Sabah and Sarawak.
Besides Kota Kinabalu, Behrend said, a brand new showroom is expected to be ready in Kuching by the end of 2016.
“We started this year with the new Autohaus in Miri, now is Kota Kinabalu. The next investment in East Malaysia will be in Kuching and it is currently under construction,” he said.
Hap Seng Star has been an authorised dealer of Mercedes-Benz vehicles since 2004.
With the launch of the latest showroom in Kota Kinabalu, which is spread across 7,346 sq ft, it now has seven Mercedes-Benz Autohaus locations nationwide.
Commenting on sales performance, Behrend expects Hap Seng Star to register a 35-40% increase in vehicle sales for 2015, on the back of new Mercedes-Benz models.
However, he said the auto business’ contribution to the group’s earnings will remain at roughly 6% despite a higher revenue contribution of 29%.
According to Mercedes-Benz’s latest quarterly results, total nine-month sales in Malaysia for 2015 came in at 8,196 units, a 70% surge compared with 4,817 units last year.
Behrend said while Hap Seng is cautious on the economic developments in the remainder of 2015 and 2016, the group is still very positive on the Mercedes-Benz brand.
In a separate announcement yesterday, Hap Seng said its net profit for the third quarter ended Sept 30, 2015 fell 16% to RM163.1 million, from RM194.4 million due to weaker results from its plantation division.
In a filing with Bursa Malaysia, the group said its plantation division’s revenue and operating profit fell by 17% and 6% respectively on lower sales volume and lower average price realisation for crude palm oil.
Revenue, however, was up 40% to RM1.16 billion, compared with RM828.9 million previously, on the back of higher revenue from all divisions except for the plantation and quarry and building materials divisions.