ELK-Desa Resources Bhd, a non-bank lender focused in the used-car segment, has posted a 20% year-on-year (yoy) rise in its revenue for the 3Q FY3/2025 period ended Dec 31, 2024 to RM51.35 mil (3Q FY3/2024: RM42.77 mil) driven by stronger contributions from both its hire purchase and furniture segments.
Nevertheless, the group’s net profit for the quarter under review declined by 8% yoy to RM8.84 mil (3Q FY3/2024: RM9.61 mil) in view of higher impairment allowances in the hire purchase segment.
As of end-December 2024, the group’s hire purchase receivables stood at RM715.91 mil, marking a 16% yoy increase. In view of the expansion of its hire purchase receivables, ELK-Desa’s bank borrowings also rose by 38% yoy to RM363.46 mil.
In spite of the increase in bank borrowings, the group’s gearing remains at a manageable 0.75 times which provides ELK-Desa with ample room for further expansion of its hire purchase portfolio.
During the quarter under review, the hire purchase segment recorded a 13% yoy revenue growth to RM32.67 mil as the group continued to expand its hire purchase portfolio.
However, higher impairment allowances contributed to a 13% yoy decline in pre-tax profit for this segment which stood at RM10.42 mil for 3Q FY3/2025.
Even so, the net impaired loans ratio improved slightly to 0.50% as of Dec 31, 2024 from 0.56% on March 31, 2024.
Meanwhile, ELK-Desa’s furniture segment posted a revenue of RM18.68 mil or a 35% yoy jump which came on the back of stronger domestic sales and continued efforts to strengthen the group’s presence in Sabah and Sarawak.
Despite higher shipping and operating costs, the segment’s pre-tax profit surged by 48% yoy to RM1.44 mil mainly due to the higher furniture sales.
From a nine-month perspective, ELK-Desa’s revenue expanded 19% yoy to RM143.66 mil (9M FY3/2024: RM121.14 mil) but the group’s net profit for the nine-month period dipped 6.3% yoy to RM25.24 mil (9M FY3/2024: RM26.95 mil) owing largely to increased impairment allowances in the hire purchase segment.
“Our continued top-line growth is encouraging and this is reflective of our ability to meet the demand for used-car financing by expanding our hire purchase business prudently in order to cater to this resilient market,” commented ELK-Desa’s executive director and chief financial officer Teoh Seng Hee.
“Moving forward, we remain mindful of the potential impact of subsidy rationalisation on consumer spending. We are also paying close attention to global economic uncertainties that may impact business and consumer confidence here in Malaysia.”
Added Teoh: “Against this backdrop, ELK-Desa will still be pursuing an expansive strategy for our hire purchase business while also sustaining a highly active loan recovery practice in a bid to lower our impaired loans ratio further.”
At the close of today’s (Feb 20) market trading, ELK-Desa was unchanged at RM1.14 with 34,900 shares traded, thus valuing the company at RM519 mil. – Feb 20, 2025
