OSK posts stronger 1Q on higher property, financial services contributions

KUALA LUMPUR (May 27): OSK Holdings Bhd’s net profit rose 21.8% to RM91.36 million in the first quarter ended March 31, 2019 (1QFY19), from RM75.02 million a year ago despite weaker revenue.

The stronger profit was mainly due to higher contributions from two segments — property, and financial services and investment holdings — which offset lower contributions from its construction, industries and hospitality segments, it said in a stock exchange filing.

Earnings per share thus improved to 4.4 sen in 1QFY19 from 3.61 sen previously. Revenue came in 6.6% lower at RM263.87 million, compared with RM282.54 million a year earlier.

Going ahead, the group is confident of delivering satisfactory results for the remaining months of the year, as it noted that performance of its property development division continues to be led by sales and progress billings from existing projects, such as Ryan & Miho in Section 13, Petaling Jaya and its Iringan Bayu township in Seremban.

Its Melbourne Square project in Australia also recorded a "good take-up rate of above 65%" since its launch, with consruction progressing as scheduled. "FY19 will see maiden profit recognition from Melbourne Square upon completion, and settlement of Stage 1 towards end of 2019, in accordance with MFRS15," it said.

The group plans to launch three projects with a combined gross development value (GDV) of RM955 million, comprising You City III in Cheras, Precinct 3, 4 and 5 at Bandar Puteri Jaya in Sungai Petani, Kedah, and 3A Single Storey Terrace Homes and 3C Double Storey Terrace Homes of Riyasana at Iringan Bayu Township in Seremban.

As at March 31, the group has RM1.53 billion worth of unbilled sales with a land bank of 1,730 acres, which carries an estimated GDV of RM11.3 billion, spread across Klang Valley, Sungai Petani, Butterworth, Kuantan, Seremban and Australia.

Meanwhile, the group said its property investment division is expected to contribute steady rental income from its commercial and retail tenants. The opening of a cinema in January at the Atria Shopping Gallery has also attracted higher footfall into the mall, with average occupancy rate remaining strong at 93%, it said.

Its industries segment and financial services and investment holdings segment are expected to perform satisfactorily, while its construction segment has an outstanding order book of RM327.88 million as of March 31, 2019.  

It also expects its hospitality segment to improve with marketing efforts to attract local and foreign travellers. “Renovation plans including new attractions for some of the hotels are underway and occupancy and room rates are expected to increase once the renovations are completed,” it added for the segment.

OSK Holdings' share price fell 1.5 sen or 1.71% to close at 86 sen today, giving it a market capitalisation of RM1.79 billion. The stock has retreated over 7% in the past year.