Quarterly Report For The Financial Period Ended 31 December 2019

Financials Archive

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Unaudited Condensed Consolidated Income Statement For The Quarter Ended 31 December 2019

Income Statement

Unaudited Condensed Consolidated Statement of Financial Position As At 31 December 2019

Balance Sheet

Performance Review

Current quarter against previous year corresponding quarter

Group revenue increased significantly to RM297.9 million compared with RM171.5 million for the corresponding quarter 2018, representing an increase in revenue by 74% or RM126.4 million. The higher revenue was largely attributable to revenue from the new subsidiary namely Toyoplas Manufacturing Sdn Bhd (“TMM”) of RM120.3 million as well as higher revenue from King Koil Manufacturing West, LLC (“KKMW”) by RM7.1 million and CBB by RM2.8 million.

Despite higher profit contribution from the manufacturing sector for the current quarter ended 31 December 2019, the Group registered a profit before tax and zakat of RM22.6 million as compared to corresponding quarter 2018 of RM29.1 million, a reduction of RM6.5 million or 22% due to lower profit from King Koil Licensing Company Inc (“KKLC”).

Performance of the respective operating business segments for the fourth quarter ended 31 December 2019 as compared to the preceding year corresponding quarter is analysed as follows:

  1. Manufacturing

    The manufacturing sector recorded 120% revenue growth, contributing RM240.1 million to the Group’s revenue as compared to RM109.2 million in the corresponding quarter last year. This sector contributed the highest increase in Group’s revenue mainly from the new subsidiary, TMM of RM120.3 million. CBB contributed RM53.7 million in revenue, higher than the corresponding quarter 2018 by RM2.8 million on higher traction from the carton business. KKMW contributed revenue of RM18.2 million, higher by RM7.1 million or 63% on higher capacity utilisation, additional new retailers and stronger sales of the premium bedding lines. CPI posted revenue contribution of RM47.8 million, higher than the corresponding quarter 2018 by RM0.6 million.

    For the current quarter, this sector posted a profit before tax of RM37.9 million as compared to RM15.7 million in the corresponding quarter 2018, higher by RM22.2 million which was mainly due to the contribution from the newly acquired subsidiary, TMM.

  2. Trading

    Revenue of RM34.8 million was RM5.9 million or 20% higher than the corresponding quarter’s revenue of RM28.9 million from higher sale of water chemicals.

    However, this sector posted a lower profit before tax of RM1.2 million as compared to RM1.8 million recorded in the corresponding quarter 2018 due to the impairment loss on trade receivables of RM1.1 million recorded during the current quarter.

  3. Licensing

    This sector recorded RM8.7 million revenue during the current quarter as compared to RM7.1 million in the corresponding quarter 2018 mainly due to higher licensing revenue from the international licensees.

    For the current quarter, this sector posted a profit before tax of RM0.9 million as compared to RM16.5 million in the corresponding quarter 2018, which was mainly derived from a one-off licensee fee of RM12.1 million obtained from one of the international licensees.

  4. Infrastructure and utilities

    Revenue of RM11.9 million was lower by RM13.2 million as compared to corresponding quarter’s revenue of RM25.1 million due to lower revenue at KPS-HCM Sdn Bhd (“KPS-HCM”) as the infrastructure work at Pulau Indah is nearing completion.

    With lower revenue during the quarter, this sector recorded lower profit before tax of RM1.7 million as compared to RM2.2 million recorded in the corresponding quarter 2018.

  5. Investment holding

    Investment holding revenue is primarily derived from the management fee charged to subsidiaries. Lower revenue recorded this quarter against that in the corresponding quarter 2018 due to management fee being charged quarterly in 2019 against annually in 2018.

    This sector recorded a higher loss before tax and zakat of RM8.7 million as compared to a loss before tax of RM6.4 million in the corresponding quarter 2018, due to higher depreciation and amortisation of intangible assets arising from the acquisition of subsidiaries.

  6. Property Investment

    Property investment registered lower revenue of RM2.8 million as compared to RM2.9 million in the corresponding quarter 2018, mainly due to lower rental income at Summit Hotel KL City Centre.

    This sector recorded a higher profit before tax of RM3.4 million as compared to a profit before tax of RM1.0 million in the corresponding quarter 2018, due to interest income accretion from amount due from Setia Eco Park amounting to RM1.7 million.

  7. Oil and gas

    NGC Energy Sdn Bhd (“NGC Energy”) registered a higher profit after tax of RM5.4 million as compared to a profit after tax of RM3.2 million in the corresponding quarter of 2018. This was mainly due to higher revenue from Industrial and Commercial (“I&C”) segment. The Group’s share of profit was RM2.2 million as compared to RM1.3 million in the corresponding quarter 2018.

Commentary On Prospects

  1. Manufacturing

    Over the years, CBB has diversified its earnings base away from paper bags division into other divisions such as carton, plastic and consumer manufacturing. These segments have been growing steadily and has been pioneering CBB’s growth over the years. CBB will continue its business efforts in these growth segments via new product developments as well as acquiring new customers, both locally and in the region.

    CPI continues to focus on its high precision plastic injection moulding segment which currently contributes the majority of its revenue to-date, while gradually positioning itself as an end-to-end electronic manufacturing services (“EMS”) provider. As the revenue stream from its plastics division grows at a steady rate, CPI now focuses on growing the electronics division in line with the company’s overall growth strategy.

    The King Koil group of companies (“King Koil Group”) had its first manufacturing plant in the US commence its operations in May 2018. The plant is delivering King Koil mattresses to a growing network of customers comprising mostly of furniture and bedding specialty retailers in California, Washington and other surrounding states. The products are also exported to customers in markets with viable demand for Made-in-USA products. Continuous efforts are being invested into increasing brand awareness, optimising the plant operations, growing the distribution network and developing products to drive revenue growth under the manufacturing segment.

    The acquisition of Toyoplas Manufacturing (Malaysia) Sdn Bhd (“TMM”) and its group of companies (collectively “TMM Group”) was completed on 15th August 2019. Post-acquisition, Perangsang Selangor’s presence in the plastic injection moulding industry following its investment in CPI was further solidified, enabling the larger group to capture broader customer segments across multiple industries by benefitting from TMM Group’s multi-geographical footprint across China, Malaysia and Indonesia.

  2. Trading

    Aqua-Flo Sdn Bhd is embarking on strategic initiatives to increase sales and future profitability by strengthening operational efficiency, introducing new products and actively bidding for contracts for the supply and delivery of water treatment chemicals and related equipment.

  3. Licensing

    The King Koil Group remains focused on growing the International licensing segment, via i) continuous engagement with the licensees and supporting their market expansion efforts; and ii) adding more territories to the King Koil network, which already covers over 80 countries worldwide. In December 2019, King Koil Licensing Company Inc (“KKLC”) agreed to grant the license for Bangladesh to its current licensee in India, who has proven capable of penetrating a complex, developing market. The license for Bangladesh comes into effect on 1 January 2020.

    Strengthening the brand power in the US is expected to have positive impact on the International licensing segment by increasing the brand value in other markets and attracting manufacturers of high calibre and capabilities to join the King Koil group of licensees.

  4. Infrastructure and utilities

    KPS-HCM completed the main infrastructure work at Pulau Indah Infrastructure Park, Phase 3C. The company is focusing on securing new projects going forward.

    Smartpipe Technology Sdn Bhd (“SPT”) continues to make its presence within the pipe rehabilitation and replacement segments. It has constantly been engaging various parties and state water agencies to promote pipe rehabilitations utilising the Compact Pipe ® technology, while also offering solutions via the conventional method. SPT had increased its effort in engaging state water agencies, offering them holistic solutions with targeted approach by focusing on the States with high non-revenue water figures caused by high usage of Asbestos Cement pipes.

    On 6th November 2019, SPT formed a joint venture (“JV”) with Menteri Besar Kedah Incorporated (“MBI Kedah”) to undertake non-revenue water (“NRW”) and other water-related projects to remedy the NRW situation in Kedah. The JV company, which has been incorporated as Darul Aman Water Solutions Sdn Bhd (“DAWS”), will be 51% held by MBI Kedah and 49% by SPT. DAWS is expected to mobilise NRW and water-related projects in Kedah, restoring the sustainability of water supply for the state.

  5. Oil and gas

    The Group remains confident in the long-term prospects of the oil and gas sector as the from expected increase in demand for Liquefied Petroleum Gas in the I&C sector while demand from domestic sector is forecasted to remain strong over the next few years.