THE EDGE MARKETS. 27TH MAY: Keck Seng (Malaysia) Bhd’s net profit for the first quarter ended March 31, 2022 (1QFY22) more than tripled to RM36.1 million from RM10.84 million in the previous year’s corresponding quarter.
Its revenue for the quarter jumped 62% to RM407.43 million from RM252.01 million. The group declared a dividend of five sen per share for the quarter.
Keck Seng’s positive performance was amid higher revenue contribution from the manufacturing and hotels segments.
The manufacturing segment benefited from higher selling price and quantity of refined oil sold during the quarter, while the hotels segment saw higher average room and occupancy rates for its overseas hotels as demand rebounded following the easing of travel restrictions and lockdown measures.
The manufacturing segment also saw better profits due to higher refining margins achieved during the quarter, while its property development segment benefited from the sale of light industrial land in Tanjong Puteri Resort, which offset the lower profit from sale of residential properties.
Going forward, the group expects its plantation and manufacturing segment to record lower fresh fruit bunch (FFB) production due to severe labour shortage, while also pointing out that the price of inorganic fertilisers has increased significantly.
“As a result of lower FFB production and higher production costs, performance of the plantation segment in 2022 is expected to be lower than 2021,” it said.
Meanwhile, its milling operations are facing headwinds including the government’s policy to restrict foreign workers, and the implementation of the RM1,500 minimum basic wage.
For its property development segment, Keck Seng said it remains cautious and vigilant amid the sharp increase in material prices and labour costs.
The group is planning to launch new phases of guarded and gated double-storey terrace houses and double-storey cluster houses at Bandar Baru Kangkar Pulai, and also promoting the sales of Avelia single-storey terrace houses, Adenia double-storey terrace houses, Amber Hills single-storey cluster houses and the remaining Phase 5A double-storey shops.
It also plans to launch a new phase of single-storey houses at Tanjong Puteri Resort, which has seen encouraging sales for the Aster single-storey terrace houses.
On the other hand, TD point and most of its other rental properties were severely affected by the pandemic, although sentiment could improve with the reopening of borders.
Keck Seng’s hotel business in New York and Hawaii, US and Ontario, Canada, are expected to gradually recover.
Its Tanjong Puteri Golf Resort has seen golfers from Singapore gradually returning, while the hotel’s conferences business has also picked up.
In view of the increasing golfing activity at the resort, the group said it may be financially viable to re-open the third golf course of 18 holes at the end of the second quarter of 2022.
Overall, however, the group said conditions are likely to remain uncertain ahead, due to the various external factors.
“The ongoing armed conflict in the Ukraine has triggered a global price increase of commodities. Covid-19 pandemic, US-China trade war, global climate change and volatility of currency exchange are likely to create further global insecurity and economic uncertainties which are likely to adversely affect the financial performance of the group in 2022,” it said.
Keck Seng’s shares fell one sen or 0.3% to RM3.86, giving it a market capitalisation of RM1.4 billion.