KUALA LUMPUR (Nov 29): OSK Holdings Bhd’s (KL:OSK) net profit for the third quarter increased 11.55%, boosted by a higher share of results of associates and a joint venture, particularly from RHB Bank Bhd (KL:RHBBANK).
While its business segments mostly registered higher profit before tax (PBT) during the quarter ended Sept 30, 2024 (3QFY2024), OSK registered lower pre-tax profit from the business of RM72.2 million during the quarter, compared with RM77.39 million a year ago.
Share of results of associates and a joint venture of RM84.14 million in 3QFY2024 boosted OSK’s overall pre-tax profit, which stood at RM156.33 million during the quarter, 9% higher compared with the same period a year ago.
In 3QFY2024, OSK’s net profit came in at RM137.24 million compared with RM123.03 million a year ago, boosted by its hospitality, financial services and investment holdings segments, while its property segment recorded lower profits.
OSK, however, did not declare a dividend for the financial quarter under review.
Revenue for the quarter increased 10.92% to RM481.00 million, from RM433.64 million in the corresponding quarter a year ago (3QFY2024).
The property segment saw a 27% decline in profit before tax (PBT) during the quarter to RM28.13 million, despite registering marginally higher revenue of RM241.12 million, compared with RM38.45 million a year ago.
The lower PBT of its property segment was due to sales and marketing costs incurred during the quarter, despite less-than-substantial revenue recognitions from newly launched projects. In the second quarter, OSK launched RM823.4 million worth of property projects in Puchong, Shah Alam, Seremban and Sungai Petani.
“The property development division will continue to launch projects as planned,” said OSK in a statement accompanying the results announcement. “For ongoing projects under construction, management will closely monitor progress and costs,” it added.
As at end-3Q2024, OSK Group’s landbank totals 1,881 acres, with an estimated gross development value (GDV) of RM16.0 billion. It is strategically located across the Klang Valley, Sungai Petani, Butterworth, Kuantan, Seremban; and Melbourne, Australia.
The lower PBT in the property segment, however, was cushioned by 12% higher profits in its financial services segment. The segment recorded RM25.27 million in PBT in 3QFY2024, compared with RM22.5 million a year ago.
“This improved performance was supported by growth in the loan portfolio, both in Malaysia and Australia. The outstanding loan disbursed stood at RM1.82 billion as at the end of 3Q2024 (3Q2023: RM1.65 billion),” said OSK in the financial results report on Friday.
The investment holding segment is an outperformer during the quarter, registering RM82.4 million in PBT, compared with RM62.2 million in the corresponding quarter. The 32.5% increase was mainly due to a higher contribution from RHB.
OSK owns a 10.27% stake in RHB.
The industries segment recorded a 26% increase in revenue to RM153.1 million. Despite this, the segment’s pre-tax profit did not increase accordingly, due to higher provision for expected credit losses on the outstanding debtors, said OSK.
The segment’s PBT rose 2% during the quarter to RM17.5 million. Despite the slower bottomline growth, OSK said that higher sales of cable products were primarily driven by private-sector demand in the data-centre and solar-power generation segments.
Meanwhile, its hospitality segment saw a 20% increase in PBT to RM3 million during the quarter, on the back of a 13% increase in revenue to RM29.7 million. The increase in revenue and pre-tax profit were mainly due to better occupancy and room rates across all of its hospitality assets.
The group’s partnerships with international operators for the rebranded hotels DoubleTree by Hilton Damai Laut Resort and Holiday Inn Express & Suites in Johor Bahru have also resulted in stronger occupancy rates.
For the first nine months of the year (9MFY2024), OSK reported a 5% rise in net profit to RM388.87 million, despite registering a slightly lower revenue of RM1.22 billion, compared with RM1.16 billion in the corresponding period a year earlier.
Looking ahead, OSK is committed to scaling its performance across segments, strengthening its presence in its core markets, and maximising shareholder value, said its group executive chairman Tan Sri Ong Leong Huat.
“OSK Group’s strong performance this quarter is driven by our ability to continually adapt to evolving market conditions, seizing opportunities with agility and sustaining growth across our key segments,” said Ong in a statement accompanying the results.
“With gains in most areas, we are strategically focused on expanding our key projects, and enhancing our presence in both Malaysia and Australia. This progress reaffirms our commitment to sustainable growth and long-term value creation,” he said.
At the time of writing on Friday, OSK’s shares were up two sen or 1.24% at RM1.63, valuing the company at RM3.36 billion. Year-to-date, the stock has gained 31.45%.