KLCCP Stapled Group expects ‘better’ financials in 2023 despite rising costs pressure

• The group recorded a net profit of RM782.66 million for the financial year ended Dec 31, 2022 (FY2022), up 58% from RM495.85 million, on the back of 24% growth in revenue to RM1.46 billion from RM1.17 billion.

KUALA LUMPUR (April 6): KLCCP Stapled Group is expecting to deliver a ‘better’ set of financial results this year, benefiting from the economy’s recovery momentum and the absence of Cukai Makmur (prosperity tax).

Nonetheless, executives at the stapled group — comprising KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust — cautioned of the rising costs environment arising from the government’s tariff rationalisation and increasing wages.

“We are also bringing our voice to the government, in terms of this electricity tariff, because there is a ripple effect [to consumers], we want to avoid that. Cost will definitely be an issue to everybody,” chief executive officer Datuk Md Shah Mahmood told reporters after concluding the group’s annual general meeting on Thursday (April 6).

“In terms of strategy and cost optimisation, efficiency in operations, so long as we don't have a major event like the pandemic, we will bring in better returns,” he added.

The group recorded a net profit of RM782.66 million for the financial year ended Dec 31, 2022 (FY2022), up 58% from RM495.85 million, on the back of 24% growth in revenue to RM1.46 billion from RM1.17 billion.

The group’s chief financial officer Rohizal Kadir also said if the momentum in the first quarter of this year could continue into the remainder of 2023, KLCCP Stapled is likely to record further financial improvement.

“Yes, we are very cautious about all these risks, [like] rising costs, but we are also looking at what are the things that we can control, like to expand our revenue base, and continue to provide innovative products like what our hotel did,” he said.

Md Shah said as the group’s office segment performances are already underpinned by long-term leases, the retail and hospitality segments also see encouraging recovery since the country enters the endemic phase of Covid-19.

“We have seen tourists coming in, and with the imminent return of Chinese tourists in 2023, it is expected to boost both the retail and hospitality industries,” he said, adding that on average, the footfall at Suria KLCC comprises 70% local and 30% foreign visitors.

Md Shah acknowledges that the hospitality sector remained competitive at the moment, but believes that Mandarin Oriental’s unique proposition of matured surrounding amenities would still appeal to customers.

“Mandarin Oriental will continue its quest to deliver world class hospitality, enhancing brand value and capitalising on the return of tourist and corporate events. With the convention centre bouncing back strongly with the return of MICE (meetings, incentives, conferences and exhibitions) events, we expect our hotel and retail to benefit from this spillover.

“We are also working collaboratively with our [KLCC] precinct partners to bring in the vibes and strengthen the footfall of our retail, hotel and other attractions, making KLCC the place to be. We give the full integrated experience of the hotels, the shopping, the iconic building, so it will definitely have an impact on hotel occupancy and retail spendings,” he explained.