by HARIZAH KAMEL / source: mrcb.com.my
MALAYSIAN Resources Corp Bhd (MRCB) will be looking to enhance its cashflow as the property market is expected to remain challenging for the foreseeable future.
In an exchange filing yesterday, the company stated it has embarked on austerity and cost-cutting measures after a resurgence in Covid-19 cases saw the reintroduction of stricter public health measures in the Klang Valley.
MRCB will be looking to monetise its inventory of unsold completed stock and focusing on its projects in hand. The group will also consider revising its strategies and financial targets according to market conditions, it stated.
The company’s net profit for the third quarter ended Sept 30, 2020 (3Q20), fell to RM920,000 from RM2.52 million from a year ago on lower contribution from its property development and investment segment, and losses in its engineering, construction and environment segment.
Revenue for the quarter fell 20.2% year-on-year (YoY) to RM297.63 million from RM372.74 million on lower income across all segments.
On a year-to-date (YTD) basis, MRCB extended its net loss to RM203.04 million from a net profit of RM17.71 million in the corresponding period last year, despite a 5% higher turnover of RM890.56 million from RM847.76 million over the same period.
The company attributed the increase in revenue to the group’s property development project in Melbourne, Australia, upon the progressive handover and financial settlement of purchased units following the completion of its construction.
The group’s 50%-owned Light Rail Transit Line 3 (LRT3) joint-venture company, MRCB George Kent Sdn Bhd, had also contributed to a net profit of RM1.6 million compared to RM1.2 million in the corresponding period due to the lower income recognition from the LRT3 project, following the re-modelling of the project from a project delivery partner to a fixed-price turnkey project.
Meanwhile, the group’s 27.94% equity-owned MQ REIT and associated company, MRCB Quill Management Sdn Bhd, contributed a combined net profit of RM12.1 million compared to RM12.4 million in the corresponding period last year.
The group’s major source of revenue and operating profits for the year continued to come from its property development and investment, and engineering, construction and environment divisions.
The property development and investment division recorded a 32% increase in revenue to RM489.4 million and a 51% decrease in operating profit to RM34.3 million in YTD, compared to RM371.4 million and RM69.8 million respectively in the corresponding period in 2019. The increase in revenue was mainly due to revenue recognition from its 1060 Carnegie project in Melbourne, Australia, and construction progress at Sentral Suites in KL Sentral.
The decline in operating profit, however, was due to the slower pace of construction during the Movement Control Order (MCO), Conditional MCO and Recovery MCO periods, and a one-off disposal gain of RM58.8 million recorded in the same period a year ago.
Its engineering, construction and environment division recorded revenue of RM363.2 million in the period which was largely contributed by the Employees Provident Fund’s headquarters at Kwasa Sentral, Damansara-Shah Alam Elevated Highway Package CB2, Sungai Besi-Ulu Kelang Elevated Expressway Package CA2 and Mass Rapid Transit Line 2 Package projects.
An operating loss of RM198.7 million was recorded for the nine months ended September 2020 as a result of impairment provisions on the recoverability of contract assets, trade and other receivables the division believes will be impacted as a result of the pandemic.