KUALA LUMPUR (Nov 27): Keck Seng (M) Bhd’s net profit dropped 42% for the third quarter ended Sept 30, 2023 (3QFY2023) as lower palm oil prices weighed on the group’s palm oil refining margin, coupled with a smaller foreign exchange (forex) gain.

Net profit came in at RM36.05 million or 10.03 sen per share, versus RM61.58 million or 17.14 sen per share a year ago, the group’s stock exchange filing on Monday showed. Revenue declined 24% to RM334.4 million from RM441.61 million.

For the nine months ended Sept 30 (9MFY2023), Keck Seng's net profit dipped 8.2% to RM146.16 million from RM159.28 million in the previous corresponding period, while revenue dropped 29% to RM1.03 billion from RM1.45 billion.

Going forward, Keck Seng cautioned that its refinery is anticipated to operate in a negative refining margin for the remaining quarter of 2023 due to the seasonal low production period of palm oil, which will continue into early 2024.

Apart from palm oil-related businesses, the group — which is 29%-controlled by the founding Ho family — is also involved in property development, real estate investment and hospitality.

Keck Seng said it will stay “vigilant” of the timing for its new property launches and the challenges associated with sales, in view of external uncertainties and the macroeconomic inflationary impacts on construction, material, and labour costs.

On its real estate investment, the group said occupancy rates at Menara Keck Seng are expected to remain stable. “For Regency Tower, the prospect for the remaining quarter is expected to remain challenging and highly competitive, due to an increase in supply of competing accommodation at competitive rental rates, on top of the stock of unoccupied residential accommodation and luxury service residences,” it said.

As for its hospitality businesses, Keck Seng is upbeat on the prospects of its overseas hotels — the Springhill Suites Midtown Manhattan in New York; the Doubletree Alana-Waikiki Beach in Hawaii, and the Delta Hotels by Marriott-Toronto Airport in Canada.

Overall, Keck Seng said “the ongoing Russian-Ukraine war, the Middle East conflict, geopolitical tensions, global warming, volatility in international currencies, high interest rates, and rising food and energy costs are expected to impact the group's performance in 2023”.

Shares of Keck Seng closed five sen or 1.1% lower at RM4.58 on Monday, giving it a market capitalisation of RM1.66 billion. Year-to-date, the stock has appreciated by 32.8%.