Engtex 1Q earnings slump 45% on absence of disposal gain

KUALA LUMPUR (May 25): Engtex Group Bhd's net profit for the first quarter ended March 31, 2018 (1QFY18) dropped 44.8% to RM9.89 million, from RM17.90 million a year earlier, mainly due to a gain on disposal of a piece of vacant industrial land in Johor of approximately RM7.1 million in 1QFY17.

Besides that, the pipe maker said in a bourse filing today that it also faced increased market price competition and raw material costs for certain manufactured steel products; and the escalated construction cost for the company's recently completed Amanja property development project in Kepong has dragged its margin.

Earnings per share for the quarter slid to 2.25 sen compared to 5.67 sen in the preceding year's corresponding period.

This is despite quarterly revenue rising 17.5% to RM298.2 million from RM253.82 million in 1QFY17, mainly attributable to the increase in market demand for certain metal related trading products and manufactured steel products.

The group's wholesale and distribution division had the most share of revenue contribution at 54.4% of total revenue. The segment recorded a 20% year-on-year increase in net revenue to RM162.3 million during the quarter. Engtex said this was mainly attributed to the rebound in market demand for certain metal related trading products in light of the volatility in international and domestic metal prices.

On its prospects for the year, Engtex acknowledged that the performance of the group will continue to be affected by factors such as the volatility in the international and domestic metal prices, and the timely implementation of projects in the construction, utilities and infrastructure and property development sectors.

"The directors remain cautiously optimistic on the performance of the group in the current year which is dependent on the domestic demand and global economic environment," it said.

Yesterday, shares of Engtex closed unchanged at RM1.15, giving it a market capitalisation of RM501.15 million. — theedgemarkets.com

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