KUALA LUMPUR (Sept 29): Hiap Teck Venture Bhd recorded a net profit of RM24.48 million for the fourth quarter ended July 31, 2022 (4QFY22), a 59.53% drop from RM60.48 million in the same quarter last year amid lower profit margin for its downstream operating subsidiaries as a result of the higher cost of goods sold and the write-down of inventories to net realisable value.
It proposed a first and final single-tier dividend of one sen per share, subject to shareholders' approval at the group's forthcoming annual general meeting.
The group's quarterly revenue, in contrast, jumped 134.48% to RM386.5 million from RM164.83 million, mainly contributed by both higher sales volume and average selling price, the group said in its Bursa Malaysia filing on Thursday (Sept 29).
According to Hiap Teck, it registered a lower profit from operations of RM6.68 million compared with RM21.64 million previously, due to higher cost of goods sold and the write-down of inventories to net realisable value of RM203.32 million.
Additionally, its share of profit from a joint venture (JV) entity also decreased to RM22.75 million from RM49.45 million, despite a higher one-off impact on reversal of impairment loss on property, plant and equipment of RM100 million at a JV entity level, mainly due to downward trend of steel prices and higher cost of raw materials.
For the full FY22, Hiap Teck's net profit slipped 4.54% to RM156.01 million from RM163.43 million despite revenue climbing 46.34% to RM1.58 billion from RM1.08 billion.
Commenting on its prospects, Hiap Teck said it takes cognisance of the challenges and heightened volatility in steel prices and financial markets, and will continue to adopt prudent procurement strategies and inventory management to optimise financial performance and preserve balance sheet strength.
Given the higher cost of inventories, Hiap Teck's management is highly cautious about the group's performance in the coming quarter as the recent decline in steel prices will have an adverse effect on the group's margins.
Hiap Teck shares closed down one sen or 4.35% to 22 sen on Thursday, with some 9.26 million shares done. Based on its closing share price, the group is valued at RM384.5 million.