Hap Seng 1Q net profit slips 25% to RM120.8m

HAP Seng Consolidated Bhd’s net profit for the first quarter ended March 31, 2021 (1Q21), slipped 25% to RM120.83 million compared to RM160.37 million in 1Q20.
This is due to the lower contribution from plantation and property divisions, mitigated by higher contribution from credit financing, automotive, trading and building materials divisions.
Its revenue also declined by 13% to RM1.28 billion, attributable to the lower contribution from its property, credit financing and trading divisions, it said in a filing with Bursa Malaysia today. 
Moving forward, the group believes that the company is well-placed to benefit from the acquisition and other business opportunities and improve its overall performance for the financial year ending Dec 31, 2021, despite the uncertainties in the domestic and global economies, as well as the Covid-19 vaccine efficacy.
It said some setbacks in the economic recovery and growth for 2021 are expected due to the latest Movement Control Order (MCO 3.0).
However, the impact is expected to be less severe as most of the economic sectors and activities are allowed to operate and businesses are better prepared with proper standard operating procedures (SOPs) in place.
“The various MCO is not expected to materially affect the operations in the plantation sector as it is categorised as an essential economic sector and allowed to operate under strict SOPs.
“Crude palm oil prices continue to be on the uptrend and surpassed RM4,000 per tonne in March 2021, a level last seen 13 years ago in March 2008,” it said.
Meanwhile, palm oil production is expected to increase in the second half of the year, while the global demand for edible oils may slow down with the rising COVID-19 cases globally amidst the discovery of new variants that have prompted many countries to reinstate lockdown measures. 
On the property sector, the company expects the sector to continue to be challenging in view of the recent spike in Covid-19 cases which affected investors’ and consumers’ sentiments.
Nevertheless, industry experts still expect the Malaysian property market to recover in 2021, albeit at a slower pace, it said.
“The credit financing division will focus on its pre-selected sectors of financing and existing quality customers to maintain a stable and quality loan receivable portfolio while being vigilant on the current economic situation and loan growth opportunities,” it said.
Today, the company’s shares ended 0.25% lower at RM7.90 on Bursa Malaysia, with 527,100 shares traded.


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