ELK-DESA Resources Bhd, a non-bank lender focused in the used-car segment, posted a slight 6.6% decline in its net profit for 2Q FY3/2025 ended Sept 30, 2024 to RM8.26 mil (2Q FY3/2024: RM8.84 mil) due to higher impairment cost.
However, the group’s revenue for the quarter surged 18% to RM46.44 mil from a year ago (2Q FY3/2024: RM39.2 mil) due to higher contribution from both its hire purchase and furniture segments.
Likewise for the half-year period, the group’s revenue edged up 18% to RM92.32 mil (1H FY3/2024: RM78.38 mil) mainly due to higher contribution from both its hire purchase and furniture segments.
However, the group’s net profit declined slightly by 5.4% to RM16.4 mil (1H FY3/2024: RM17.34 mil) as a result of higher impairment allowance.
As at Sept 30, ELK-Desa’s hire purchase receivables stood at RM693.97 mil which is 18% higher than the previous year. This marked the highest hire purchase receivables level recorded for ELK-Desa.
In order to support the expansion of its hire purchase receivables, the group’s bank borrowings had risen 26% to RM312.07 mil although its gearing remains at a manageable level of 0.64 times.
For the group’s furniture segment, revenue spiked by a notable 25% to RM14.68 mil during the quarter under review from a year ago.
This was mainly due to higher furniture sales, especially in Sabah and Sarawak which was reflective of the group’s continued focus in growing its presence in East Malaysia.
However, gross profit margin decreased marginally from 35% to 33% due to higher purchase cost for imported goods that stemmed from higher shipping cost.
Overall, the segment recorded a pre-tax profit of RM340,000 from RM70,000 in the corresponding quarter a year ago as a result of improved sales and lower impairment allowance.
The ELK-Desa board has declared a single tier interim dividend of 2 sen/share (2Q FY3/2024: 2 sen/share) in respect of the group’s financial year ending March 31, 2025 (FY3/2025).
“Our performance in the first half of the year was supported by the overall growth of the Malaysian economy, manageable inflation rate and improved consumer confidence,” commented ELK-Desa’s executive director and chief financial officer (CFO) Teoh Seng Hee.
“Moving forward, we expect the domestic economy to remain resilient but we are also mindful that consumer spending as well as our customers’ ability to service their loans on time may be affected by the rationalisation of subsidies and price controls along with potential fluctuations in commodity prices.”
Added Teo: “ELK-Desa will be striving towards reducing its impaired loans ratio further by sustaining an active loan recovery effort while at the same time, carefully expanding our hire purchase receivables in a strategic and sustainable manner.”
At 2.44pm, ELK-Desa was untraded at RM1.23 which gave the company a market capitalisation of RM559 mil. – Nov 13, 2024
