KUALA LUMPUR (Aug 15): Consumer credit company ELK-Desa Resources Bhd (KL:ELKDESA) posted a net profit of RM8.14 million in the first financial quarter ended June 30 (1QFY2025), down 4% against RM8.5 million a year ago.

Earnings per share dropped marginally to RM1.79 million from RM1.87 million previously, according to the company’s filing with Bursa Malaysia.

ELK-Desa registered notable revenue growth of 17% to RM45.88 million, compared to RM39.18 million a year ago.  

It did not declare any dividend for the quarter under review.  

The increase in revenue was due to higher contribution from both its hire purchase and furniture segments.

Profit before tax declined marginally by 1% to RM10.99 million in 1QFY2025 from RM11.11 million a year ago. This decline was mainly due to an increase in impairment allowance and other expenses.  

The group’s hire purchase receivables stood at RM668.34 million in 1QFY2025, a 16% increase from last year’s RM574.47 million.  

For the hire purchase segment, revenue in the first three months of FY2025 increased by 15% to RM30.71 million as a result of the growth of its portfolio.

In order to support the expansion of its hire purchase receivables, ELK-Desa raised its bank borrowings by 26%. In spite of this, its gearing remains at a manageable level of 0.63 times.  

“For our hire purchase segment, we will continue to sustain a growth trajectory by expanding our hire purchase receivables moderately, targeting a growth rate in the lower to mid-teens”, said executive director and chief financial officer Teoh Seng Hee.

Notably, its impairment allowance for hire purchase soared 32% to RM9.71 million. However, its net impaired loans ratio fell to 0.52% as at June 30, 2024, from 0.56% as at March 31.  

“This is reflective of the group’s efforts towards ensuring adequate provisions for its impaired loans”, its filing said.

Meanwhile, Sabah and Sarawak remain exciting markets for ELK-Desa as it plans to enhance its logistics capabilities while offering customers more in terms of diversity and range of products.  

For the furniture segment, revenue expanded by 22% to RM15.17 million, mainly due to higher domestic wholesale activities, especially in East Malaysia, where ELK-Desa has been steadfastly growing its presence in key markets. 

Gross profit margin for the segment contracted slightly to 36% from 37%. Additionally, other expenses rose due to higher selling and distribution costs from shipping cost to East Malaysia. 

Despite these challenges, the group’s furniture segment still posted a profit before tax of RM0.97 million for the quarter.

ELK-Desa's share price closed unchanged at RM1.21 on Thursday, valuing it at RM550 million.