OSK Holdings Bhd expects profit contributions from fee-based and fixed-income operations to boost future earnings, as reliance on the stockbroking business continues to shrink, said group managing director and chief executive officer Ong Leong Huat.
The fee-based and fixed-earnings businesses contributed some 30% to 40% of net profit last year while the broking sector only contributed some 20%.
“The fee-based operation is less than two years old and it is growing,” Ong told reporters after the company EGM in Kuala Lumpur yesterday. The company derives fees by offering services such as venture capital, corporate finance, fund management and futures.
Barring any unforeseen circumstances, he expects the second half-year to be “reasonably good”.
During the first half-year ended June 30, net profit slipped to RM24.1mil from RM58.8mil a year ago. Sales were also lower at RM171.4mil against RM199.2mil previously.
The company had attributed the poorer performance to the weak equity market compared with the corresponding period last year.
On plans to gain investment bank status, Ong said OSK was already offering similar services but noted that there were certain limitations without the status.
OSK and its property arm, OSK Property Holdings Bhd (OSKP), gained shareholders’ approval yesterday to proceed with the proposed streamlining exercise that involved the sale of Ke-Zan Holdings Bhd from the former to the latter for RM138.6mil, which would be paid via the issuance of 110.8 million OSKP shares at RM1.25 each.
In a separate session, OSKP executive director Teong King Hua said Ke-Zan, which was involved in property investment, was expected to contribute some RM6mil a year to pre-tax profit.
It was likely to contribute some RM1mil to earnings during the last two months of the year when the exercise is completed, he said.
Chief operating officer Gerard Tan Boon Chuan said the company was aggressively identifying strategic land in the Klang Valley and a few deals were in the pipeline.
Its on-going Bandar Puteri Jaya project in Sungei Petani, Kedah, currently in its third phase, was still receiving positive response, Teong said.
Some 1,700 acres of the 2,581-acre project were still not developed, he said, adding it would take about 15 years to fully develop the land there.
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