The real estate market in 2023 exhibited positive trends, particularly in the latter half, showcasing a robust recovery from the challenges posed by the COVID-19 pandemic. The National Property Information Centre (NAPIC) highlighted a significant increase in the number of new properties launches in the primary real estate market, rising from 4,797 units in the second quarter of 2023 (2Q 2023) to 6,900 units in the third quarter (3Q 2023). This upward trend directly stimulated the demand for door frames.

Just days ago, Malaysia's leading comprehensive door frame system supplier, Econframe Berhad (EFRAME, 0227), announced outstanding quarterly performance, setting new records in both revenue and profits. Without delay, let's delve into EFRAME's latest disclosed financial results.

Revenue Comparison (YoY +61.20%, QoQ +29.36%)

For the first quarter ending November 30, 2023, the company reported a revenue of approximately RM27.18 million, marking an impressive 61.20% increase compared to around RM16.86 million in the same period last year.  This remarkable growth is mainly attributed to the revenue contribution from Lee & Yong Aluminium Sdn Bhd ("LYASB"), a company acquired by EFRAME in August 2023. Even excluding LYASB's contribution, the company's revenue still exhibits noteworthy growth, increasing approximately RM4.02 million or around 24.00% year-on-year.

Out of the RM27.18 million revenue, approximately RM22.72 million came from the manufacturing segment, showing a year-on-year increase of about 52.41%. The remaining RM4.46 million or so came from sales, witnessing a substantial year-on-year surge of approximately 128.00%.

Similarly, compared to the previous quarter, the company's revenue increased by around RM6.16 million or 29.36%.

(Note: EFRAME's fiscal year ends on August 31 each year)

Net Profit Comparison (YoY +129.15%, QoQ +88.60%)

Fuelled by robust overall business income and LYASB's contribution, EFRAME achieved a net profit of approximately RM4.40 million this quarter, marking a substantial year-on-year increase of about 129.15%, and a quarter-on-quarter increase of approximately 88.60%.

It's noteworthy that EFRAME remains a net cash company. In this quarter, the company holds approximately RM20.47 million in cash, with borrowings amounting to only around RM8.15 million.

Outlook

The acquisition of LYASB is anticipated to further enhance EFRAME's future earnings.

Additionally, as part of its business expansion, the company recently announced a conditional share sale agreement with ETA Industries Sdn Bhd to acquire a 70% equity interest in ETA World Sdn Bhd, a company engaged in industrial property development and construction activities. As of the end of 2023, ETA World holds an order book of approximately RM165.50 million, providing a clear earnings outlook for the company.

Given these expansions and strategic moves, the management expresses confidence in EFRAME's future prospects. So, dear readers, what are your thoughts on EFRAME, currently trading at a price-to-earnings ratio of approximately 19.47 times?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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