Melati Ehsan’s Q3 net profit down 93%

PETALING JAYA: Melati Ehsan Holdings Bhd’s net profit for the third quarter ended May 31, 2017 plunged 93.28% to RM514,000 from RM7.65 million a year ago, even as revenue more than doubled to RM32.24 million from RM13.26 million a year ago.

In a filing with Bursa Malaysia yesterday, the group said the lower profit was due to lower other income and higher administrative expenses. During the same quarter a year ago, other income was mainly derived from gain on disposal of a subsidiary.

The construction segment reported a higher pre-tax profit of RM4.05 million during the quarter compared with RM2.83 million a year ago while revenue was also higher at RM76.73 million compared with RM43.17 million a year ago.

The improved performance was mainly due to the People’s Housing Programme (PPR) project and the new road work in East Coast Economic Region (ECER) project.

However, the property development segment’s pre-tax loss widened to RM429,000 compared with RM246,000 a year ago while revenue was lower at RM176,000 compared with RM597,000 a year ago.

The decrease in revenue was due to sales recognised in the previous financial year, which were then cancelled and forfeited during the financial period under review.

The trading segment reported a higher pre-tax profit of RM322,000 compared with RM157,000 a year ago while revenue was higher at RM11.58 million compared with RM6.394 million a year ago.

The increase in sales and profit during the quarter was due to higher volume of building materials being traded and consumed by the group’s appointed sub-contractors for the construction division.

For the nine months ended May 31, 2017, net profit fell 91.03% to RM1.53 million from RM17.03 million a year ago while revenue rose 76.42% to RM88.49 million from RM50.16 million a year ago.

The group expects the ongoing construction works for the ECER and PPR projects to continue contributing positively to its revenue and profitability, despite a cautious economic outlook.

It said the government’s proactive spending and pump priming of the economy would drive domestic demand, thereby supporting growth, which would result in business and construction activities that would benefit the group.

“The outlook of the local construction sector is good and will benefit the industry players. Ongoing projects and those scheduled to commence in the near term such as road works and affordable housing schemes will ensure the sector continues to grow in the next few years.”

The group’s share price rose 0.59% to close at 84.5 sen yesterday with 30,000 shares traded, giving it a market capitalisation of RM100.87 million.