Fajarbaru 3Q earnings surges eight times on property development revenue

KUALA LUMPUR (May 31): Fajarbaru Builder Group’s net profit in the third quarter ended March 31, 2017 (3QFY17) grew close to eight times to RM22.2 million, from RM2.86 million a year earlier, on revenue generated by its property development segment.

Revenue climbed 110.8% to RM198.9 million, from RM94.33 million in 3QFY16.

The group said in a filing with Bursa Malaysia today that it recognised a revenue of RM138 million in its property development segment, upon completion of its maiden project in Melbourne, Australia, called Gardenhill.

This revenue represents approximately 57.5% of its gross development value (GDV) for the project, the filing said. “The remaining GDV will be recognised upon settlement by the purchasers,” it added.

For the cumulative nine months (9MFY17), Fajarbaru posted a net profit of RM28.77 million, up 106.4% from RM13.94 million a year ago, while revenue rose 1.1% from RM319.86 million to RM323.45 million.

On outlook, Fajarbaru said it expects the construction business to remain challenging. However, it believes the project pipeline and sentiments ahead “will be more positive” in the coming quarters.

Elaborating on this, the group said it is poised to participate in any of the ongoing mega-infrastructure projects.

“The group will continue to bid for jobs that have promising and exciting growth potential, in order to replenish its order book and enhance its future earnings,” the group said.
 
Meanwhile, the property development division is expected to bring more contribution to the group in 2017, as the GardenHill has been handed over to the purchasers, it said.
 
Additionally, the group had in April launched its second project Paragon in Melbourne, which “has received overwhelming response from the public”.
 
Construction costs, methodologies and phasing are undergoing review, while improvements have been planned to ensure products are delivered as promised and within optimal costs.
 
As for Malaysia, the group’s project in Kuala Lumpur, Rica Residence Sentul, has started construction, and has garnered positive response from the public, despite the current economic situation, it said.
 
This project is expected to be officially launched in 4QFY17, Fajarbaru said. As for its projects in Puchong and Melaka, these will be launched upon improvement in the market situation.
 
Another segment which has generated significant revenue is the logging and timber trading segment. It will continue to contribute significantly the group’s topline, on the back of stable average prices of timber products.
 
“The group will continue to explore more business opportunities and is committed to continue capitalising its strengths to generate sustainable revenue from its existing or new businesses,” the filing added.
 
Fajarbaru settled unchanged at 91 sen yesterday, valuing the group at RM329.83 million. — theedgemarkets.com

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