Bina Darulaman to focus on profitability, cashflow and sustainability in 2H22

The group is focusing on optimising costs, including hedging measures and placing orders for goods in advance to reduce any price increase pressure 

by S BIRRUNTHA / pic credit:

KEDAH-BASED property developer Bina Darulaman Bhd (BDB) will be focusing on profitability, cashflow and sustainability aspects in the second half of 2022 (2H22), in effort to strengthen the group’s financial position.

Group CEO Mohd Iskandar Dzulkarnain Ramli said in terms of profitability, BDB will mitigate or reduce the potential business loss that will impact the group’s overall earnings. 

He said on top of that, the company will also focus on optimising cash conservation, as well as explore new businesses which will ensure the group’s longevity. 

Mohd Iskandar, who is also the company’s acting president, also emphasised that it is crucial for the group to post a profit for the full financial year (FY22), after returning to the black in the second quarter ended June 30, 2022 (2Q22). 

“We believe that the good performance recorded in 2Q could continue for the rest of the year. If we look at the trend of BDB’s earnings, normally business will pick up in 3Q and 4Q. I believe that this trend will continue as well for this year. 

“What I can assure is that posting profitable numbers is a must for us — that I can give some assurance,” he noted during the group’s 2Q22 financial performance and business overview media briefing in Kuala Lumpur recently. 

For 2Q22, BDB registered a net profit of RM1.13 million from a net loss of RM2.84 million a year earlier, while revenue rose 23.1% to RM51.62 million from RM41.93 million previously. 

We believe that the good performance recorded in 2Q could continue for the rest of the year. If we look at the trend of BDB’s earnings, normally business will pick up in 3Q and 4Q. — Group CEO Mohd Iskandar Dzulkarnain Ramli

The group’s growing construction orderbook currently stands at RM519 million compared to RM240 million in 2020. 

BDB’s profitability in 2Q22 was made possible as a result of the group’s channelling its efforts with regards to enhancing the group’s core businesses towards revenue resilience and stability, maximising operational efficiencies, enhancing manpower utilisation and financial restructuring. 

He also noted that the group’s improved revenue and profitability over the previous quarter are attributed to the resumption and better contributions from its road construction activities and the completion of initiative from its property division. 

Its property division quarterly revenue more than doubled to RM21.22 million compared to RM10.18 million in the previous quarter.

Segmental profit for the quarter was RM1.05 million compared to a loss of RM2.19 million in the previous quarter. 

The increase in segmental revenue and profit over the previous quarter is attributed to the income generated from joint-venture development through BDB Setia Sdn Bhd. 

Meanwhile, BDB’s engineering, construction and quarry (ECQ) division posted higher revenue of RM31.62 million compared to RM19.63 million in the previous quarter, an increase of improvement in the construction activities. 

Mohd Iskandar pointed out that the restructuring has clearly succeeded with BDB taking full advantage of the resumption of normal business conditions and market demand for the group’s services.

“We have successfully realigned the group’s business and operational structure, sharpened productivity and strengthened capital efficiency, thereby ensuring that we overcame the challenges and adversity of 2020 and 2021 and are ready to maximise opportunities this year,” he said. 

Commenting on the group’s plans for 2023 and beyond, he said the pandemic in 2020 and 2021 demonstrated that the group’s core business was highly vulnerable to lockdowns and the Movement Control Orders put in place by the authorities at the height of the Covid-19 pandemic. 

“The pandemic also demonstrated that certain sectors remained resilient throughout the pandemic phase, namely, the food production, power and telecommunications sectors. 

“Looking ahead, we will be undertaking studies to identify and determine the feasibility of adding these business sectors to the group’s portfolio in order to further embed resilience and futureproof the group’s revenue and profitability,” he added. 

Additionally, Mohd Iskandar also highlighted that the group will diversify its core business portfolio starting in 2023 to strengthen its financial position. 

“Staying ahead of other companies, BDB will diversify its revenue streams to spread and minimise risks. Our plan moving forward will see the group branch out into new areas such as telecommunications, renewable energy and minerals while embracing greater levers of cost optimisation, human capital and digitisation,” he said. 

However, for the current financial year, he said BDB will continue to focus more on real estate business with a current gross development value of RM1 billion. 

On the group’s substantial pipeline of property development and construction projects, Mohd Iskandar noted that this includes the state road maintenance, Pelubang Water Treatment Plant, Darulaman Lagenda and Aman Perdana projects. 

He said this bodes well for the group’s ability to secure more contracts in 2H22 and 2023, coupled with its track record of delivering projects on time and on budget. 

“We will also be looking to take on unique projects outside of our core businesses, such as Langkawi Designer Premium Outlet, which will be a significant value multiplier for our property and ECQ divisions,” he said. 

Speaking on the rising property prices, Mohd Iskandar said BDB has no plans to raise the sale price of houses at least for the next six months. He noted that the decision was made by the group despite having to face the current situation of rising construction material costs. 

He said, at the moment, the group is focusing on optimising costs, including hedging measures and placing orders for goods in advance to reduce any price increase pressure. 

“I personally hope that the presentation of the Budget 2023 will provide some flexibility to the real estate sector such as in terms of compliance costs to provide subsidies and incentives to support the industry. This is especially for developers who offer affordable housing,” he added. 

Among its affordable housing is the Lagenda Darulaman Township in Sungai Petani, Kedah. The development was carried out in collaboration with LPB Development Sdn Bhd which involved a GDV of RM593 million with residential offerings priced between RM150,000 to RM280,000. 

When asked whether the surge in raw material prices and the increase in the Overnight Policy Rate (OPR) will have an impact on property sales prices, Mohd Iskandar said BDB currently plans to maintain the price points of its properties and absorb any increases in costs. 

He said the selling price of its residential properties is at an affordable price of around RM300,000 and will try to maintain that selling price to give the public the opportunity to own a home. 

“The OPR and raw material prices undoubtedly have an impact on all sectors, not just real estate. However, BDB is able to cover this price surge in the next six months. We have had several price control measures. Currently, there is no problem for the group.” 

BDB is Kedah’s investment holding company with a 26-year track record in its core businesses of ECQ and property development, while maintaining its investment interest in the state’s tourism sector. 

The group is also responsible for township development, construction, road building, quarrying and leisure via its subsidiaries in Kedah, namely. BDB Land Sdn Bhd, Kedah Holding Sdn Bhd, BDB Synergy Sdn Bhd, BDB Infra Sdn Bhd and BDB Leisure Sdn Bhd. 

This article first appeared in The Malaysian Reserve weekly print edition.