KUCHING: YKGI Holdings Bhd foresees that the financial results of its second quarter ending June 30, 2023 (Q22023) may not be promising as the market is expected to be sluggish.
The company said the recent surprise hike by Bank Negara Malaysia in Overnight Policy Rate (OPR) by 25 basis points has added burden to the local businesses.
“Steel price is weak in its momentum and hovering in a narrow band. The 2023 US banking crisis and high debt obligation have brought negative impact to the global economy, in particular Asian countries,” added YKGI as it released its Q12023 financial results. In the quarter under review, YGKI returned to the black with group net profit of RM161,000 from loss of RM813,000 in Q12022 as revenue grew to RM62.6 million from RM58.2 million.
Earnings per share stood at 0.03 sen from losses per share of 0.18 sen previously. The East Malaysia operation contributed about RM47.6 million to group revenue while West Malaysia operation chipped in the remaining about RM17.7 million.
The East Malaysia operation is involved in the manufacture and sale of pre-painted, galvanised iron, roll-formed products and trading in hardware and building materials.
The West Malaysia operation is engaged in the manufacture and sale of rolledformed products, trading of coated and non-coated coils, hardware and building materials.
YKGI attributed the group’s current quarter’s turnover which increased by RM7.1 million or 12 per cent from a year ago to higher sales revenue derived from better market demand on the group’s products and higher revenue from projects. Group pre-tax profit rose to RM1.97 million from RM0.43 million previously as a result of higher gross profit margin benefitted from an increase in the selling price of its products during the current quarter.
However, as compared to the immediate preceding quarter (Q42022), YKGI saw group revenue dipped by RM9 million or 12.1 per cent to RM65.3 million from RM74.3 million.
“Despite lower revenue, profit before tax has increased by 131% from pre-tax loss of RM1.55 million to pre-tax profit of RM0.48 million.
The operating profit for the period was RM4.42 million versus an operating profit of RM1.64 million, an improvement of 170%,” the company said in explanatory notes to its financials.
The company attributed the improved performance in the current quarter to higher selling price of products which contributed to an increase in gross profit margin.
On Feb 20, 2023, YKGI announced that its 80.36%- owned indirect subsidiary ASTEEL Development Sdn Bhd (ADSB) had accepted the terms and conditions offered by the Sarawak Housing Development Corporation (HDC) to undertake the development of affordable houses and apartments on Phases 3, 5 and part of Phase 4 of Lot 37-43 and 45-47 (New Lot 2488-3298) Block 7, Matang Land district, Sungai Tengah here.
“The formal agreement in respect of the proposed development will be executed by ADSB and HDC in due course,” said the company. YKGI said the company will convene an extraordinary general meeting (EGM) to get shareholders’ approval on its proposal to diversify the group’s existing business operations to include construction and property development.
“The company anticipates that, barring any unforeseen circumstances, the construction business and property development business will potentially contribute 25% or more to the net profits of net assets (NA) of YKGI group, respectively and/or result in a diversification of more than 25% of the NA of YKGI group respectively.
“Pursuant thereto, the company proposes to seek the approval of the shareholders of YKGI for the proposed diversification pursuant to Paragraph 10.13(1) of the Listing Requirements,” it said. As at March 31, 2023, YKGI group had total borrowings of RM87.92 million, and the group’s bankgearing ratio is about 1.08 times.
