KUALA LUMPUR: Kumpulan Perangsang Selangor Bhd's (KPS) robust development plans for its core businesses has paid off as the group recorded strong revenue and earnings growth in the financial year ended Dec 31,2019.
At its last traded price of 56.5 sen at midday on Thursday and its net tangible asset (NTA) of RM1.78 per share as at Dec 31,2019, the NTA is 3.15 times its share price which has fallen 19.3% year-to-date.
Last Friday, KPS, which is 57.88% owned by the Selangor state government's Darul Ehsan Investment Group Bhd, reported its strongest quarterly results.
It said the stronger financial performance was due to a new subsidiary contribution from Toyoplas Manufacturing (Malaysia) Sdn Bhd (Toyoplas) and full year contributions from CPI (Penang) Sdn Bhd (CPI) and King Koil Manufacturing West, LLC (KKMW).
For the quarter ended Dec 31,2019, KPS's revenue surged by 73.7% to RM297.90mil from RM171.50mil a year ago.
“With broader earnings base and higher contribution from the core businesses, the group's profit after tax and minority interest (Patami) remained strong at RM17.50mil, as it was in the corresponding quarter last year, ” it said.
KPS said its manufacturing segment was the main contributor to revenue. It recorded a 119.9% growth and contributed RM240.1mil, or 80.6%, to the droup’s revenue, versus RM109.2mil a year ago.
The performance of this segment of business was boosted by the contribution from Toyoplas, along with that from other manufacturing entities such as CPI, Century Bond Bhd (CBB) and KKMW.
Toyoplas contributed RM120.3mil in revenue, driven mainly by consumer electronics and industrial tools divisions, operating out from its plants in China, Indonesia and Malaysia.
CPI posted stable revenue contribution of RM47.8mil, growing 1.5% from the corresponding quarter last year. CBB maintained its influence, contributing RM53.7mil to the group.
During the quarter, CBB posted 5.5% in revenue growth on higher traction from the carton division.
KKMW contributed the remaining revenue of RM18.3mil. Its revenue grew by 64.9% on higher capacity utilisation, additional new retailers and stronger sales in the premium bedding lines.
KPS also said another RM34.8mil of the group’s revenue was derived from the trading business, represented by Aqua-Flo Sdn Bhd whose revenue grew by 20.4% to RM34.80mil from RM28.9mil a year ago. At RM34.8 million, Aqua-Flo contributed 11.7% to group revenue.
The licensing business, King Koil Licensing Company LLC (KKLC) contributed RM8.7mil, up 22.5% from RM7.1mil a year ago. This was supported by steady traction from international royalty fees. KKLC contributed 2.9% to the group’s revenue this quarter.
The infrastructure business which is represented by KPS-HCM Sdn Bhd and Smartpipe Technology Sdn Bhd contributed RM9.1mil and RM2.8mil respectively.
However, revenue from KPS-HCM was lower as the infrastructure works at Pulau Indah were nearing completion. Having adjusted for inter-group sales, revenue from the infrastructure business moderated to RM11.5mil, lowered by 50.5% on-year.
The infrastructure business contributed 3.9% to the group’s revenue during the quarter.
As for KPS's operating profit, it declined by 26.1% to RM27.8mil from RM37.6mil due to lower other income and higher other expenses which arose mainly from Toyoplas’ acquisition.
Recall that other income in the corresponding quarter last year was aided primarily by a one-off licensee fee amounting to RM12.1mil from one of KKLC’s international licensees.
“Further optimisation of the balance sheet has resulted in lower finance costs. KPS also recorded RM4.3miln share-of-profit from associates this quarter, which was made up by contributions from NGC Energy Sdn Bhd and SPRINT, ” it said.
Due to broader earnings base and higher contribution from the core businesses, KPS posted profit before tax and Zakat of RM22.6mil, although this was lower from the RM29.1mil a year ago. After adjusting for non-controlling interests, KPS recorded profit after tax and minority interests (Patami) of RM17.5mil.
(Toyoplas contributed RM120.3mil in revenue, driven mainly by consumer electronics and industrial tools divisions, operating out from its plants in China, Indonesia and Malaysia.)
For FY19, its revenue rose by 49% to RM867.5mil compared with RM582.3mil in FY18.
Manufacturing businesses grew by 82.2%, contributing RM651.5mil, or 75.1%. The trading, infrastructure and licensing businesses remained significant, contributing RM117.4mil or 13.5%, RM51.5mil or 5.9%, and RM36.3mil or 4.2% to the group’s revenue, respectively. Property investments contributed the remaining RM10.8mil or 1.2%.
Commenting on the results for the fourth quarter and FY19, KPS managing director/group CEO Ahmad Fariz Hassan said 2019 was a transformational year for KPS with new earnings dynamics post the SPLASH disposal shedding brighter lights on the earnings visibility.
"I am pleased with the progress and results we have delivered this year, seeing the expansion in both revenue and Patami flowing stronger into the fourth quarter.
"We have been consistently delivering financial commitments and at the same time creating sustainable value to our shareholders. We closed the year with the strongest quarterly results, solidifying our position despite the challenging business landscape, ” Fariz said.
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