ELK-Desa's net profit falls 8.2% in Q1 on lower hire purchase contribution

PETALING JAYA: ELK-Desa Resources Bhd's net profit declined 8.2% to RM5.05 million for the first quarter ended June 30, 2017 against RM5.5 million in the previous corresponding period, due to lower profit contribution from the hire purchase segment.
Revenue, however, rose 16.3% from RM21.99 million to RM25.57 million.
Despite the cautious outlook ahead, the group said it is not likely to experience any slowdown in the demand for second hand cars financing for the financial year ending March 31, 2018, as its business segment is relatively small as compared with the overall auto financing industry.
"The group will continue to strategically operate in the under-served niche market and focus on growing the small value second hand car financing segment. The business strategy will also be constantly reviewed to ensure the group continues to stay relevant in the industry and at the same time keeping the credit risk exposure within the tolerance level," it said in a filing with the stock exchange.
Meanwhile, EKL-Desa said its furniture business will continue to be affected by the sluggish consumers' sentiments and current soft economic environment.
"However, the group will continue to grow the furniture business and focus on ensuring the operational efficiencies in the various divisions (i.e. retail, wholesale, export and manufacturing)," it noted.
The board is confident that the group's profit for the financial year ending March 31, 2018 to be better than financial year ended March 31, 2017.
At noon break, ELK-Desa shares were unchanged at RM1.16 on some 15,000 shares done, giving it a market capitalisation of RM341.45 million.