KUCHING: Naim Holdings Bhd has posted impressive group net profit of about RM43.3 million in third quarter ended September 30, 2024 (3Q2024) against RM10.7 million in 3Q2023, thanks partly to a net gain of RM13 million from the disposal of an investment property.
The group’s net share of profit from subsidiary Dayang Enterprise Holdings Bhd was RM32.7 million, which contributed significantly to the earnings in the current quarter.
Earnings per share were lifted to 8.64sen from 2.13sen.
Naim group revenue, however, shrank substantially to RM80.4 million in 3Q2024 from RM142.5 million in 3Q2023 or down by a hefty RM62 million.
When compared to the immediate preceding quarter (2Q2024), the property developer group revenue had more than doubled to RM80.4 million (2Q2024:RM30.24 million) but pre-tax profit had dropped marginally to RM47.99 million (RM48.21 million).
Naim attributed the higher revenue to increased work progress achieved on the ongoing construction and development projects in the current quarter.
“The profit of RM48 million did not vary much from the immediate preceding quarter.Net gain of some RM13 million arising from the disposal of an investment property had also contributed to the group profit for the current 3-month period,” the company said in explanatory notes to its financial results.
On a nine-month basis in 2024 (9m2024), Naim chalked up strong earnings with group net profit surged to RM92.5 million (9m2023:RM15.1 million) despite a sharp drop group revenue to RM197.6 million (RM297.9 million).
Naim blamed the hefty RM100.3 million drop in group revenue in 9m2024 from a year ago to lower property sales secured coupled with lower work progress achieved from its construction and development projects.
“On the other hand, the group reported a higher net profit before tax of RM100.1 million compared to the net profit before tax of RM19.5 million recorded in the corresponding period of 2023.The fluctuation in the net results was analysed as follows:
(1) improved segment profit of about RM21.5 million (9m2023: – RM6.4 million) from our core businesses, mainly from some cost savings from certain completed projects and a gain arising from the disposal of an investment property; and
(2) improved performance of our major associates Dayang Enterprise Holdings Bhd (DEHB) and its subsidiary, Perdana Petroleum Bhd. The share of net profit (after tax) of the DEHB group had increased substantially, from RM29.8 million in January-September 2023 to RM72.7 million during the current period under review,” said the company.
Reviewing the group’s performance in property development segment in 9m2024, Naim said revenue had decreased to RM30.23 million (9m2023:RM58.39 million), resulting in the segment to slip into the red, with loss of RM5.27 million (+RM7.87 million).
“The group managed to secure new property sales of about RM42.2 million during the period against sales of about RM57.9 million achieved in the corresponding period of 2023.
“The segment performance was also partly impacted by lower work progress achieved, particularly from the newly launched development projects as well as interest expenses incurred.”
On the performance of the construction segment, Naim said in 9m2024,its revenue dipped to RM138 million (RM223.5 million) or down by 38 per cent mainly due to lower work progress particularly from substantially completed projects.
The segment, however, reported a higher profit of RM17 million (RM49,000) as a result of some cost savings arising from the amicable settlement of litigation with a contractor.
In 9m2024, the others segment had managed a turnaround with a profit of RM11.27 million from loss of RM7.35 million in 9m2023 as revenue grew sharply to RM29.34 million from RM19.96 million.
The better performance was attributed to higher quarry sales as well as improved occupancies and rates from its hotel in Bintulu and accommodation operations. The segment profit was largely contributed by the gain of RM13 million in the sales of an investment property.
On prospects going forward, Naim said although the property market is expected to remain soft in the near term, they “maintain a positive outlook on the upcoming growth prospects, particularly in Sarawak where gradual recovery is evident despite persistent challenges”.
These challenges include property overhang and shifting consumer purchasing power influenced by interest rate adjustments and inflationary pressures.
Naim announced on-going efforts to clear existing inventory while introducing new projects at competitive prices, despite rising costs of materials and financing. The company expects gradual improvement in sales activities, driven by phased releases of new housing developments to meet anticipated demand.
It has intensified digital marketing and targeted sales initiatives to strengthen customer relationships and expand its market reach. Additionally, Naim aims to attract buyers beyond Sarawak and Malaysia through the Sarawak-Malaysia My Second Home programme.
On the prospects of the construction segment, Naim said the group management is closely monitoring its current projects on hand to make sure that they are completed with the targeted timeline and achieve the expected margins.
On the others segment, Naim is optimistic that its contribution to the group will gradually improve in the near term, particularly in the retail and commercial leasing and hotel business in Miri and Bintulu.
“Various assets’ enhancement initiatives are being planned and will be carried out in the near future to ensure our retail, commercial and hospitality assets remain relevant in the market to achieve better investment yield which we believe may take some time to bring about fruitful results.
“The assets’ enhancement initiatives will include a branding strategy alongside physical and service quality upgrades to existing assets to allow for better trade and tenant mix while improving the experiential aspects of these assets. Efforts to optimise revenue stream also extend to more prudent debt management practices, with close monitoring and management of collections from retail leasing businesses.”
On its education business, Naim said the group’s upcoming investment in education, infrastructure and initiatives, including technological advancements in learning platforms, presents good opportunities for growth and diversification.
“We could capitalise on these trends and contribute to the region’s educational landscape in which we operates in the years to come,” said Naim.
