Gadang's 2Q net profit up 57.5% on higher construction, property contributions

KUALA LUMPUR (Jan 25): Gadang Holdings Bhd’s net profit rose 57.5% to RM23 million or 10.62 sen per share for the second quarter ended Nov 30, 2016 (2QFY17), from RM18 million or 7.4 sen per share a year ago.

The company said this was mainly due to improved profit margins from construction activities and higher contributions from the property division.

Revenue climbed 45% to RM147.9 million from RM102 million in 2QFY16, it said in a filing with Bursa Malaysia today.

For the cumulative six months (6MFY17), Gadang’s net profit rose 15.6% to RM44.6 million or 16.97 sen per share, from RM38.6 million or 16.12 sen per share for 6MFY16. Revenue went up 0.44% to RM252.5 million from RM251.4 million in 6MFY16.

Moving forward, Gadang said it is mindful of a more challenging market condition and has placed measures to ensure the group’s performance.

It said the construction division is selectively bidding for new contracts involving government infrastructure and building projects with ongoing projects being reviewed to optimise cost savings and design effectiveness. Its current outstanding orderbook is about RM527.2 million.

On property, Gadang said it will focus on affordable housing projects in line with market demand.

It has also managed to secure joint ventures with landowners to reduce the land cost impact on overall project viability, it said, adding that unbilled sales was registered at RM187.2 million.

Gadang expects its income from four water treatment operations to increase with fresh negotiations for better tariff rates for FY17.

As for its plantation segment, higher yield is expected with maturing acreages in FY17.

Gadang’s share price fell two sen or 1.9% to RM1.03 for a market capitalisation of RM673.1 million. — theedgemarkets.com