ELK-Desa Resources Bhd, a non-bank lender focused in the used-car segment, has not allowed the pandemic-stricken economy to affect its financial performance.
Despite the COVID-19 pandemic having disrupted the group’s business and operations, it still managed to post a 12.3% rise in net profit to RM10.8 mil year-on-year during the 2Q FY3/2021 quarter (2Q FY3/2020: RM9.62 mil) while its revenue for the period under review edged up 2% to RM37.39 mil (2Q FY3/2020: RM36.62 mil).
On a quarter-on-quarter basis, the group net profit chalked up a gain of 370% from RM2.3 mil in the preceding quarter (1Q FY3/2021).
This company attributed this to higher profit contribution from both the hire purchase and furniture segments as economic activity increased after the nationwide conditional movement order was lifted.
However, for the cumulative six-month period, ELK-Desa saw its net profit dipped 36.2% to RM12.04 mil (6M FY3/2020: RM18.89 mil) on the back of a 5.6% decline in revenue to RM67.79 mil (6M FY3/2020: RM71.82 mil).
The company has declared a single tier interim dividend of 2.5 sen/share (2Q FY3/2020: 3.5 sen) in respect of the current financial year ending March 31 next year which is payable on Dec18.
Moving forward, ELK-Desa’s executive director and chief financial officer Teoh Seng Hee expects macro-economic factors such as lower employment rate, subdued business and consumer confidence as well as reduced trade and investment activities to continue pressurising borrowers’ ability to repay loans.
“At the same time, the regulatory changes such as the Temporary Measures for Reducing the Impact of COVID-19 Act 2020 may impact the hire purchase financing sector,” he pointed out in a media release.
“Nevertheless, the group is confident that it will be able to sustain shareholders’ value by exercising prudence while working very hard on asset recovery.”
Teoh also expressed confidence that ELK-Desa is poised to recover its momentum once the current health crisis is resolved given demand for used car hire purchase solutions continue to be strong.
“Moreover, the initiatives announced by the Government in the recent Budget 2021 have the potential to spur economic growth, alleviate income hardships and address employment issues,” he noted. “These are critical factors that will contribute to the health and performance of the Group.”
At the close of today’s trading, ELK-Desa was down 3 sen or 2.11% at RM1.39 with 11,000 shares traded, thus valuing the company at RM413 mil. – Nov 19, 2020