KUALA LUMPUR (Aug 26): Property developer and construction firm Lim Seong Hai Capital Bhd (KL:LSH) posted a 42.7% drop in third-quarter net profit amid margin compression and lower revenue recognition from its LSH Segar project that was nearing completion.

Higher costs and increased credit loss allowances also weighed on its earnings for the three months ended June 30 (3QFY2026), which fell to RM14.97 million from RM26.12 million a year earlier, its bourse filing showed. Quarterly revenue dropped 7.5% to RM112.73 million from RM121.88 million.

The group, which is planning to transfer to the Main Market, said quarterly gross profit margin narrowed to 28.85% from 36.99%, driven by a shift in property product mix towards the lower-margin affordable phase of the Lake Side Homes project, and repair and equipment replacement costs at the KL Tower.

Net profit for the nine months ended June 30 (9MFY2026) fell 10% to RM59.6 million from RM66.21 million for 9MFY2025, even as revenue grew 12.7% to RM366.44 million from RM325.25 million on higher contribution from its construction and facilities management segments.

The lower cumulative earnings was largely due to higher administrative expenses, higher staff costs and marketing expenditure. A higher tax charge, which rose to RM20.64 million from RM19.48 million, also weighed on the group's bottom line.

Overall gross profit margin also narrowed to 35.43% from 37.95% as its property segment's margin fell from 43.7% to 27.11% due to lower recognition from the LSH Segar project and the lower-margin contribution from Lake Side Homes.

The group declared a third interim single-tier dividend of 0.56 sen per share for FY2026, payable on Oct 6. This brings year-to-date dividends declared for FY2026 to 2.34 sen per share, same as the YTD period last year.

As at June 30, LSH Capital had an outstanding construction and engineering orderbook of RM1.2 billion, including RM449.24 million from external clients, expected to be progressively recognised through FY2029.

“Supported by a robust orderbook, an expanding development pipeline and forward initiatives such as the Morib Rejuvenation Project and our proposed transfer to the Main Market, we remain confident of creating sustainable, long-term value for our shareholders,” said LSH Capital chairman Tan Sri Lim Keng Cheng.

Additionally, the group said visitor traffic at the KL Tower remained supportive of its facilities management business, with Asian tourist arrivals benefitting from a redirection of travel demand from destinations affected by geopolitical conflicts. It also cited Malaysia’s visa-liberalisation measures as a factor supporting visitor numbers.

Shares of LSH Capital closed one sen higher at RM1.62 on Wednesday, giving the group a market capitalisation of RM1.36 billion.