Malaysian Resources Corp’s 2Q profit falls 24% to RM45.5 mil

KUALA LUMPUR (Aug 26): Malaysian Resources Corp Bhd (MRCB) posted a 24.3% drop in net profit for the second quarter ended June 30, 2016 (2QFY16) to RM45.5 million, as 2QFY15’s net profit of RM60.10 million was boosted by the sale of Platinum Sentral and other assets.

Correspondingly, revenue fell to RM389.19 million from RM530.28 million, its bourse filing showed.

For the first half ended June 30, 2016 (1HFY16), MRCB’s earnings fell 83.3% on-year to RM49.89 million from RM297.97 million, as revenue shrunk 11.7% to RM825.21 million from RM934.47 million.

The property development & investment [segment] recorded revenues and profits from ongoing projects, like Sentral Residences in KL Sentral CBD (central business district) — which contributed just over half of the division’s revenue during the period — and the 9 Seputeh mixed-residential development in Jalan Klang Lama. There was also a gain of RM41.6 million from the disposal of  Sooka Sentral in the period, and income from remaining investment properties in KL Sentral CBD and Shah Alam, MRCB said in a separate statement.

Meanwhile, its engineering, construction and environment business saw contribution from the Light Rail Transit (LRT) Ampang Line extension and two LRT stations, and ongoing construction of six commercial buildings in Johor. It also recognised revenue from a few power transmission-related construction works, and other construction projects.

MRCB plans to continue focusing on trimming net gearing and growing its property development and investment, and construction, engineering and environment segments.

Its property development projects now have a gross development value of RM50 billion, while its external construction order book stands at RM6.6 billion, said MRCB.

After the completion of the second tranche of its private placement, MRCB’s net gearing has fallen to 0.92 times — a significant drop since its corporate transformation strategy was first unveiled at the end of 2013, when net gearing stood at 1.74 times. Net gearing is expected to drop further on completion of the RM640 million sale of Menara Shell to MRCB-Quill REIT.

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This article first appeared in The Edge Financial Daily, on Aug 26, 2016. Subscribe to The Edge Financial Daily here.