Gunung Capital cautious on National Service contract

PETALING JAYA: Gunung Capital Bhd which saw a more than 18-fold increase in net profit for the first quarter ended March 31, is cautious of extension to its National Service Programme contract given the new government’s target of reducing operational expenditure.
The company made a RM2.66 million net profit for the quarter under review, compared with RM146,000 in the same quarter a year ago. The service contract has contributed to revenue for the past seven years including the quarter under review.
Revenue for the quarter under review rose by 18.5% to RM12.04 million from RM10.61 million in the preceding year’s corresponding quarter, driven by its transportation division which saw a constant revenue from the contract to ferry children from the Defence Ministry (Mindef), as well as the 3,989 effective day-trips made for the National Service Program.
The group is expecting to see cost pressure although it expects service-contract revenues to continue to provide a positive cashflow for the group in the current financial year.
Meanwhile, the shuttle bus service for the International Islamic University of Malaysia, and the Mindef contract to ferry school children, and ad-hoc charters will continue throughout FY2018.
“In the medium term, we are looking forward to the commissioning of a number of small hydro projects in Perak in FY2018, and FY2019, which will contribute to Gunung’s long-term revenue and earnings, and enhance Gunung’s growth potential,” said its board of directors.
“The long-term stable income stream will reduce Gunung’s dependency on incomes solely from chartering land-based transportation assets. Under our small hydro portfolio there are five sites with an installed capacity of 34.25MW at various stages of construction, and four sites with an installed capacity of 97.8MW, which will start construction in FY2018,” it added.
The stock closed unchanged at 38.5 sen with some 12,000 shares done.