Jaks’ profit tumbles on property development losses, one-off spending

KUALA LUMPUR (Aug 18): Jaks Resources Bhd’s net profit for the second quarter ended June 30, 2017 (2QFY17) fell 80% to RM1.98 million from RM9.83 million a year ago, due to losses in its property development division and one-off expenses in relation to the granting of share options.

Its property development division’s loss before tax expanded to RM13.9 million in the quarter under review, from RM7.1 million in 2QFY16.

“The main reason for the losses was the provision of RM6.9 million for liquidated and ascertained damages in the current quarter. Sale of property units of this quarter was low, caused by the slowdown in the property market. The Evolve mall’s revenue was hampered by weak retail sentiment, resulting in lower rental income.

“A one-off expense of RM7.6 million on recognition of fair value adjustment, pursuant to the granting of share options in the long-term incentive plan, was charged off in the quarter,” it told Bursa Malaysia.

Quarterly revenue, meanwhile, grew 7% year-on-year to RM170.9 million from RM159.1 million, contributed mainly by its construction division’s RM131.7 million top line — where RM43.1 million was derived from the Vietnam EPC Construction work. Property development division contributed RM37.9 million.

In the first half of the year, the group’s net profit was down 13% y-o-y to RM9.5 million from RM10.9 million, though revenue grew 16% to RM325.7 million from RM281.9 million.

Moving forward, it expects its construction business to perform satisfactorily, as the progress of its local and Vietnam works stays on track.

Its property business, however, remains challenging on the back of slower economic momentum, due to weaker purchasing sentiment.

This article first appeared in The Edge Financial Daily, on Aug 18, 2017.

For more stories, download TheEdgeProperty.com pullout here for free.