MAIN Market-listed Federal International Holdings Bhd (FIHB) [formerly Federal Furniture Holdings (M) Bhd] has maintained its growth momentum in the group’s 2Q FY6/2023 ended Dec 31, 2022 with a 35.2% jump in the group’s net profit to RM1.86 mil from RM1.38 mil in the corresponding quarter a year ago.
The stronger earnings were recorded despite the group posting a decline of 10.4% year-on-year (yoy) in revenue to RM31.7 mil during the current quarter under review (2Q FY6/2022: RM35.34 mil).
Its Bursa Malaysia filing shows that the improvement in FIHB’s bottom line was mainly due to higher contribution from its manufacturing and interior fit-out (IFO) divisions. FIHB is involved in the manufacturing division, IFO and construction businesses.
“We have managed to navigate through uncertainties in the market while maintaining the group’s profitability despite a challenging environment,” commented FIHB’s executive director Datuk Choy Wai Ceong. “Our manufacturing, IFO and construction divisions are all in the black during the quarter.”
In line with the improved performance in its 2Q FY6/2023, the group’s net profit for its 1H FY6/2023 surged by more than 86 times to RM3.74 mil from a mere RM43,000 in the corresponding period a year ago. Similarly, FIHB’s revenue surged 33.2% yoy to RM67.26 mil during the same period (1H FY6/2022: RM50.52 mil).
“During the current financial year, we have seen a significant reduction in export orders due to the slowdown in the global retail sector as a result of the COVID-19 pandemic,” observed Choy.
“The prospect of the manufacturing division will depend on how the pandemic would affect its key customer’s store expansion programme and the ability of the group to secure other sales.”
In anticipation of the challenges ahead, the management has undertaken a cost optimisation exercise to reduce its operating overheads to mitigate the lower recorded revenue.
“The strength of the greenback against the ringgit as well as the production throughput will have a significant impact on the group’s margin for its manufacturing division,” projected Choy.
Meanwhile, the group’s construction business will continue to be the key growth driver. With the two new projects secured in the current quarter, the construction division now has on-going projects with a combined contract sum of RM368 mil that will provide earnings visibility to the group.
In terms of the group’s longer-term expansion strategy, FIHB’s Bursa Malaysia filing said it expects the group’s venture into the renewable energy segment to gain further momentum.
“Warrants RE Assets Sdn Bhd (WREA), a 50% owned company of the group, together with Asia Greentech Fund has to-date completed the acquisition of solar plants with a total capacity of 15MW (megawatt),” noted the group.
“On the other hand, Sunview Group Bhd, which is WREA’s technical partner and a leading solar power system provider and installer, has just been listed on the ACE Market of Bursa Malaysia with the group having a 3.66% direct stake in Sunview,” it added.
At the close of today’s trading, FIHB was down 0.5 sen or 0.91% to 54.5 sen with 83,100 shares traded, thus valuing the company at RM79 mil. – March 1, 2023
