Encorp’s profit soars as property business improves

An artist impression of what Encorp Marina Puteri Harbour will look like upon completion

KUALA LUMPUR: Encorp Bhd, a Felda-owned property development and construction firm, boosted its earnings by almost four times to RM16.8mil in the fourth quarter (Q4) ended Dec 31, 2016.

In a filing with Bursa Malaysia, the company said the 280% year-on-year growth in quarterly earnings were achieved on 147% higher revenue of RM146.3mil.

Encorp improved its bottom line despite the cost of sales swelling to RM78.8mil from RM12.8mil a year earlier. 

The better Q4 performance raised the company’s earnings for the full year to RM28.5mil compared with just RM1.4mil in the preceding year.

Encorp said the increase in revenue in the quarter under review was mainly due to the higher progress of works achieved by the property division in the Encorp Marina Puteri Harbour project in Johor.

“Coupled with close monitoring and effective management of the indirect and direct costs of the group, the profit before taxation has correspondingly increased by RM21.1mil or 243% to RM29.8mil for Q4 2016 from RM8.7mil for Q4 2015,” it said.

On its prospects for 2017, the company said the property sector was expected to remain challenging in light of economic uncertainty, particularly with investors adopting a “wait and see” approach, stringent lending rules imposed by banks and oversupply in certain property sub-sector market.

“With these challenges ahead, the group will focus on measures to increase efficiencies and pursue innovative concepts to enhance its development projects such as the Bukit Katil township development (in Malacca) that the group recently embarked via a master development agreement signed between the group and Felda,” Encorp said.

It added that the group would also explore new revenue sources such as industrial property subsector market and facilities management.

In a separate filing, Encorp said the company, which is 70.8% owned by Felda’s unit Felda Investment Corp Sdn Bhd, was considering various options to address the shortfall in the public shareholding spread.

Bursa Malaysia Securities gave Encorp until April 9 to comply with the shareholding spread requirement.