KUALA LUMPUR (March 24): Wong Engineering Corp Bhd’s net profit slumped by 87.92% year-on-year (y-o-y) in the first quarter ended Jan 31, 2022 (1QFY22) after its construction and property development segment slipped into losses due to lower billings and share of loss from an associate company.

In a filing with the bourse, the manufacturer of high precision stamped and turned metal parts said its net profit fell to RM243,000 from RM2.01 million a year before.

Its revenue also shrank by 25.28% y-o-y to RM18.52 million from RM24.79 million. The drop in revenue was due to lower billings from construction as the Kuchai Lama project approaches its completion stages offset by higher sales from manufacturing driven by strong demand by customers from the electrical and electronics (E&E) sector.

Earnings per share in 1QFY22 declined to 0.1 sen compared with 0.82 sen a year earlier.

On a quarterly basis, Wong Engineering’s net profit tumbled 91.43% from RM2.83 million or earnings per share of 2.57 sen in 4QFY21. Revenue fell 9.9% from RM20.56 million due to lower sales and billings from construction and manufacturing segments.

It attributed the lower quarter-on-quarter earnings to lower contributions from all business segments, namely the manufacturing, construction and property development and investments divisions.

“The manufacturing segment is also experiencing rising cost of raw materials, utilities and other consumables aside from the persistent supply chain disruption compared to 4QFY21. Additionally, [the] investment segment also led to the group’s overall lower profit before tax as it records a fair value loss in 1QFY22 relative to 4QFY22,” it added

Looking forward, the group anticipates the near to medium-term outlook to remain positive, buoyed by healthy orders in the manufacturing segment from customers in the semiconductor and E&E sector.

The group is also working closely with existing and new potential customers on securing fresh orders to drive growth and expansion.

“Nevertheless, we remain cognizant of the volatile business environment...the persistent challenges brought about by the Covid-19 pandemic as well as the conflict between Russia and Ukraine as the manufacturing segment contends with surging cost of raw materials, utility and other consumables and continued disruption in the supply chain,” it added.

As for the construction and property development segment, it said the Kuchai Lama project is expected to be completed in the near future. The group will cautiously seek out new projects and opportunities for expansion.

“Our associate company, Broadway Lifestyle Sdn Bhd is also currently assessing the suitability of timing to undertake the proposed development in Sepang on a parcel of land it acquired back in 2020.

“Premised on the above and barring further unforeseen circumstances, we remain cautiously optimistic of the group’s financial performance and prospect for the coming quarters,” it concluded.

Shares of Wong Engineering closed down one sen or 1.55% at 63.5 sen, for a market capitalisation of RM252 million.

Source: TheEdge - 25 Mar 2022