HLG records recovery across all divisions, 41 pct growth expected
HLG recorded improvements across all segments, on a q-o-q basis, and analysts believe the group could see a 41 per cent growth in FY18 based on upcoming mega projects in East Malaysia.
KUCHING: Harbour-Link Group Bhd (HLG) recorded improvements across all segments, on a quarter-on-quarter (q-o-q) basis, and analysts believe the group could see a 41 per cent growth in the financial year 2018 (FY18) based on upcoming mega projects in East Malaysia.
In a filing to Bursa Malaysia, HLG announced that its profit before tax (PBT) for the fourth quarter of the financial year 2017 (4QFY17) grew to RM1.95 million, which was RM5.04 million higher than the preceding quarter ended March 31, 2017.
It also reported that its revenue for 4QFY17 grew 55 per cent to RM9.21 million as compared with RM5.93 million recorded in the preceding quarter ended March 31, 2017.
“The increase in revenue and PBT are due to current projects in hand which are progressing smoothly,” it said in its filing.
In a recent report, the research arm of Maybank Investment Bank Bhd (Maybank IB Research) concurred with this view and pointed out that all of HLG’s divisions posted stronger 4QFY17 PBT.
It explained that the group’s shipping posted weaker revenue (down 24 per cent q-o-q) due to lower freight rates for conventional vessels, but stronger PBT (an increase of 90 per cent q-o-q) in the absence of extraordinary costs incurred in 3QFY17 (which are preliminary cost for the new vessel and dry docking cost for its tugs/barges).
As for HLG’s logistics division, Maybank IB Research pointed out that the segment posted higher PBT on the delivery of port equipment; while its engineering division turned profitable with a PBT of RM2 million (compared with a pretax loss of RM3 million in 3QFY17) given its higher orderbook of circa RM50 million (an increase from RM20 million as at end-3QFY17).
It added, HLG’s property division’s earnings was also better from the sales of the last few unsold units from Kidurong Gateway (Phase 1-2).
“Given the low base in FY17 and our expectation of construction of mega infrastructure projects (such as the Baleh Dam)/heavy industries manufacturing plants in East Malaysia, we project HLG’s net profit to grow 41 per cent to RM31 million in FY18,” the research team opined.
It maintained its earnings forecast of the group for FY18 and FY19, and retained its ‘hold’ call on the stock.