ELK-DESA Resources Bhd, a non-bank lender focused on the used-car segment, posted a 7% rise in revenue for its 1Q FY3/2026 ended March 31, 2025 to RM49.25 mil (1Q FY3/2025: RM45.88 mil) driven by higher contributions from both its hire purchase and furniture segments.
However, the group’s net profit declined 21% to RM6.43 mil (1Q FY3/2025: RM8.14 mil) due mainly to higher impairment allowances and finance costs.
The group’s hire purchase receivables as at June 30, 2025 stood at RM721.07 mil or 8% higher from RM668.34 mil a year ago in line with its strategy to expand its hire purchase portfolio moderately.
To support this growth, bank borrowings surged by 26%. Despite this, ELK-Desa’s gearing remained at a manageable level of 0.78 times compared to 0.63 times last year.
For the hire purchase segment, revenue for the quarter inched up 7% to RM32.87 mil supported by portfolio growth.
Impairment allowances edged up 35% to RM13.08 mil while the credit loss charge rose from 1.43% to 1.77% mainly due to slower hirer repayment and higher losses from sales of repossessed vehicles.
Furniture segment
Accordingly, the group’s net impaired loans ratio increased to 0.85% as of June 30, 2025 from 0.60% as of March 31, 2025 while pre-tax profit for the segment fell 18% to RM8.20 mil.
Meanwhile, the group’s furniture segment posted an 8% increase in revenue to RM16.38 mil which is attributable to stronger domestic sales.
However, gross profit margin (after deducting shipping and transportation costs) declined to 27% from 31% due to higher shipping costs to East Malaysia and increased operating expenses in line with the sales volume.
Consequently, pre-tax profit for the segment declined to RM380,000 from RM970,000 a year ago.
“The group remains committed to a moderate expansion of its hire purchase portfolio for its FY3/2026 while keeping a close-eye on factors that may influence repayment behaviour and asset recovery,” commented ELK-Desa’s executive director Teoh Seng Hee.
“Among these factors are the potential increase in living costs resulting from subsidy rationalisation and the wider implementation of the Sales and Service Tax (SST). In addition, shifting consumer demand patterns driven by the entry of Chinese car manufacturers could also impact the residual values of used cars.”
Added Teoh who is also ELK-Desa’s chief financial officer (CFO): “In response, we’ll continue to strengthen our recovery efforts by staying closely engaged with our customers and upholding our structured recovery procedures.”
At the close of today’s (Aug 21) market trading, ELK-Desa was unchanged at RM1.13 with 54,200 shares traded, thus giving the company a market capitalisation of RM513.9 mil. – Aug 21, 2025
