Zecon 3Q net profit jumps 59.6% to RM9.15m on hospital and Pan Borneo jobs

KUALA LUMPUR (June 25): Engineering and construction solutions provider Zecon Bhd's net profit for the third quarter ended March 31, 2020 (3QFY20) rose 59.6% to RM9.15 million from RM5.73 million a year earlier, due mainly to contributions from Hospital Pakar Kanak-Kanak Universiti Kebangsaan Malaysia (HPKK) and Pan Borneo Highway project.

In a bourse filing today, Zecon said the HPKK project also contributed towards the significant amount under the other income of the group.

It said revenue for the quarter jumped to RM143.1 million versus RM112.8 million.

Earnings per share rose to 6.35 sen against 4.37 sen previously.

For the cumulative nine months ended March 31, 2020, Zecon posted a net profit of RM43.18 million compared with a net loss of RM8.76 million a year earlier, on the back of RM466.9 million revenue versus RM292.19 million.

Zecon did not declare any dividends.

Reviewing its performance, Zecon said the initial stage of Movement Control Order had affected the targeted recognition of revenue from construction.

It said the main reason was the slowdown of the progress due to stop-work order by the authorities, which adversely impacted the timing and the targeted billings.

Meanwhile, it said administrative cost showed positive effect arising from the austerity drive exercise being carried out.

"Nevertheless, the finance cost was largely influenced by the recognition of the interest during construction related to our HPKK Private Finance Initiative project," it said.

On its prospects, Zecon said its Pan Borneo Highway project was initially affected by the imposition of the Stop Work Order issued by the Ministry of Works effective March 18, 2020.

It said the order had caused a significant delay on the progress and thus affected the targeted quantum of claims to be billed.

"Despite the acceptance of approval to resume works on May 14, 2020, strict conditions imposed related to working hours and social-distancing requirements have directly affected the productivity.

"In addition, our HPKK project was also affected with the imposition of construction works being suspended until April 14, 2020," it said.

Zecon said in spite of the aforementioned and barring any unforeseen circumstances, the group will strive to achieve a favourable performance as planned.

As at the midday break, Zecon dipped 1.32% or 0.5 sen to 37.5 sen, valuing it at RM54.04 million.

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