Kein Hing Q1 earnings dip 10% to RM1.48mil

KUALA LUMPUR: Kein Hing International Bhd’s net profit fell 10.4% to RM1.48mil in the first quarter ended July 31 from RM1.65mil in the same period last year mainly due to the cost incurred by the new factory located in Hai Phong, Vietnam.

The metal parts manufacturer saw its revenue grew 10% to RM59.7mil during the quarter compared with RM54.4mil a year ago on stronger customer demand for parts/metal components used in TV, fridge, printer and automotive industries.

“Despite the increase in revenue, the group reported lower pre-tax profit for the current quarter mainly due to the impact from the overhead incurred by the new factory located in Hai Phong, Vietnam as it has yet to achieve the optimal production and sales, higher depreciation charge from new machines invested and the escalating labour costs as a consequence of constraints in labour supply in Malaysia operation coupled with the wage inflation experienced in Vietnam operation,” Kein Hing said in the notes accompanying its financial results. 

Nevertheless, Kein Hing said its financial position strengthened with the net profit and the equity attributable to owners of the company stood at RM109mil as at July 31, translating to net assets per share of RM1.10.

Its cash and bank balances also increased from RM33mil as at April 30, 2017 to RM37mil as at July 31, 2017. The group prudent management always maintains sufficient cash and available funds through an adequate amount of committed credit facilities and cash reserves.

Kein Heing said its revenue was expected to encounter some fluctuation as a result of the less predictable customers’ demand. Furthermore, it said the constraint in labour supply in Malaysia would continue to be a critical issue as it directly affects the production and manpower planning.
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