Gadang slips into the red in 4Q as major projects completed, margin under pressure

KUALA LUMPUR (July 27): Gadang Holdings Bhd reported a net loss of RM4.08 million in the fourth quarter ended May 31, 2022 (4QFY22) from a net profit of RM10.75 million a year ago, due to lower contribution from its construction business after completion of major projects, while profit margins were weighed by higher costs in on-going projects.

In a filing with Bursa Malaysia, Gadang said revenue for 4QFY22 fell 9.3% year-on-year to RM138.18 million, down from RM152.35 million a year earlier.

Nevertheless, for the full FY22, the group’s net profit jumped over three times to RM41.55 million from RM12.9 million, while revenue grew 13% to RM651.99 million from RM574.77 million in FY21.

Going forward, Gadang said it is “cautiously optimistic” about registering positive growth for FY23 barring any further unforeseen circumstances.

Nonetheless, the group acknowledged that the Government’s austerity drive would likely impact growth prospects over the medium term.

“Despite the foreseeable hurdles, the group aims to continue pursuing all possible opportunities to replenish its order book, whilst continuously implementing cost control strategies,” it said.

Gadang said its construction division has an outstanding order book of RM1.05 billion, of which RM680 million of new projects were secured in July this year.

Shares of Gadang closed half sen or 1.45% higher at 35 sen per share on Wednesday, giving it a market capitalisation of RM254.82 million.