KUALA LUMPUR (Nov 19): IFCA MSC Bhd (KL:IFCAMSC) on Tuesday posted a sharp year-on-year increase in its third quarter net profit, driven by strong revenue growth and operational efficiencies. On the same day, it announced plans to cap its cash pile at RM70 million, with excess to be returned to shareholders as dividends.

Net profit for the quarter ended Sept 30, 2024 (3QFY2024) jumped to RM5.5 million, nine times the RM610,000 it made in 3QFY2023, on higher revenue contributions and improved cost management, its bourse filing showed.  

Revenue climbed 42.3% to RM30.08 million from RM21.15 million, reflecting robust sales across its core business operations. The increase in revenue was attributed to its operations in Malaysia (83%) and Indonesia (3%), which offset a drop in revenue (12%) from its China segment. "This strong growth in the Malaysia segment is driven by growing orders and project deliveries," the group said.

It declared a dividend of 1.50 sen per share for the quarter, to be paid on Dec 20.

For the nine months ended Sept 30, 2024 (9MFY2024), IFCA MSC recorded a net profit of RM12.82 million, up almost nine times from RM1.46 million in 9MFY2023, as revenue grew 35.1% to RM77.8 million, from RM57.17 million previously.

The plan to retain no more than RM70 million cash on its balance sheet was unveiled under its capital allocation framework, which outlines the intended future use of its capital.

As at end-2023, the group had cash reserves of RM78.8 million, with no borrowings.

The group said it aims to remain in net cash position over the long term, and that the framework is meant to clarify the board's priorities and underline IFCA MSC's commitment to drive shareholder value.

"There are times when buying back our own shares are more value enhancing and if we believe that our share price is trading at below intrinsic value, we will also consider share buybacks as an effective way to enhance shareholder value. In the event that our cash balance drops below RM70 million due to a major value enhancing opportunity, the board shall have the liberty to temporarily adjust the dividend payout to restore the cash balance, if necessary," the group said in a separate statement.

Meanwhile, it said the transition to cloud and mobile technology as well as software-as-a-service and artificial intelligence is providing a strong tailwind for its continued growth.

"We are a highly profitable business as a market leader with best-in-class product in an industry that is going through technological change... Our top priority remains reinvesting into our core business to drive organic growth," it said.

IFCA MSC's share price closed unchanged 2.5 sen or 4.39% higher at 60 sen on Tuesday, giving the group a market capitalisation of RM361.93 million. The stock has about doubled year to date.