At A Glance

At A Glance

  • December 2017

    30th Anniversary Gala Dinner

    The grand event was held at JW Marriott, and approximately 400 clients, business associates and colleagues attended! We presented cheques to Kiwanis Job Training Centre (KJTC), National Stroke Association of Malaysia (NASAM) and Beautiful Gate - caps for Long-Service Award There were also awards for Long-Term Business Partnership Award, IFCA Integrated Solutions Award and IFCA Long-Service Award. Click here to view the photos.

  • Official launch of IFCA Accelerator Programme (IAP)

    We launched IAP in Google Singapore. IAP is a collaboration with Google Cloud, and we aim to nurture and develop local prop-tech companies by providing fundraising, business networking and mentorship. If you have a prop-tech start-up, submit your application to [email protected] or [email protected]

  • November 2017

    Positive financial results for Q3

    IFCA posted 9M17 net profit of RM5.9mil vs.RM4.4mil loss in 9M16, and has been in the black the previous five quarters. For 3Q17, the revenue was up 11.7% on-quarter.

  • October 2017

    30th Anniversary roadshow

    The 30th Anniversary celebration started with a roadshow – KL, Penang, JB and Kuching. Many keywords were shared - AI, BI, Machine Learning, Data-Driven Marketing, Programmatic Ads, Cloud - and if you are keen on finding out more about them, get in touch with us. Anish Malhotra and Dennis Ser from Google Cloud also spoke at our event.

  • September 2017

    Drive for data-driven marketing continues

    We generated leads that exceeded the projected numbers for a project with balance units in Penang. Previously, we generated more than 4,417 leads within 4.5 months for a project in KL. Get in touch with us if you are interested in a data-driven campaign for your project.

  • May 2017

    IFCA 2.0

    IFCA MSC Berhad embarked on a transformational programme known as IFCA 2.0, which aims to strengthen positive growth rates for the next few years. Find out more about it here.

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News

Cover Story: Robust economy lifts corporate earnings

The Edge Markets | 22 Mar 2018



AS the saying goes, “When the going gets tough, the tough get going”. This could not be truer for a number of Bursa Malaysia-listed companies that saw better earnings last year, in line with the country’s impressive economic performance.

Although the Malaysian economy slowed in 2015 (5%) and 2016 (4.2%) after delivering 6% in 2014, its gross domestic product growth of 5.9% last year would still have been the envy of many.

Malaysia faced several challenges in 2016, including lower oil revenue as a result of a slump in crude oil prices, slowing global growth and problems with strategic investment firm 1Malaysia Development Bhd, which reportedly spooked foreign investors, leading to a weakening of the ringgit against the US dollar.

The oil and gas industry had to adjust to a “new reality” of low oil prices with Brent crude, which was trading at around US$114 per barrel in mid-2014, collapsing to around US$27 in January 2016. This harsh situation saw national oil company Petroliam Nasional Bhd slashing its capital and operating expenditure by RM50 billion for the 2016 to 2020 period.

Corporations had to step up to the plate when the economy slowed — operations-wise, cost-optimisation efforts had to be undertaken and as with any slowdown, there were impairment and asset write-downs to reflect prevailing economic conditions. On top of that, a weak ringgit resulted in foreign exchange losses on the books of importers as well as companies with international operations.

However, things started to look up for the Malaysian economy last year as the ringgit reversed its decline to become one of the strongest currencies in Asia, Brent crude recovered to an average of US$54 per barrel from US$44 in 2016 and exports grew 18.9%, the strongest since 2005.

Bloomberg data tracking the trailing 12-month performance of 877 companies listed on the Main and ACE markets of Bursa last year showed that 447 or 51% of them had performed better (including lower losses for unprofitable companies) while the rest of them deteriorated.

In fact, some of the 447 charted phenomenal growth in their 12-month earnings as a result of changes in other comprehensive income — a reversal of provisions earlier recognised as well as foreign exchange translation differences. Others saw a pick-up in business as reflected in the growth in their revenue and better earnings as a result of cost-optimisation exercises that were undertaken.

Super big caps

Of the 38 super big caps — companies with a market capitalisation of more than RM10 billion — on Bursa, 27 reported a growth in earnings last year.

Leading the pack was plantation giant IOI Corp Bhd. It recorded a net foreign currency translation gain of RM265 million on its US dollar-denominated borrowings due to the impact of a stronger ringgit and a fair value gain on derivative financial instruments of RM44.6 million in the first half of its financial year ending June 30, 2018, which bolstered its earnings, although revenue declined 4.8% to RM4.6 billion.

In its latest quarterly report, IOI notes that operationally, the performance of its plantation business is expected to be positive in the next three months due to resilient crude palm oil prices and the continued recovery in the production of fresh fruit bunches (FFB).

An increase in the benchmark for refined oil prices — Mean of Platts Singapore — led to Petronas Dagangan Bhd recording a 25% increase in average selling prices. The company reported a 24.2% increase in revenue in FY2017 to RM26.74 billion while its earnings per share (EPS) grew 63% to RM1.55.

Oil and gas service provider Dialog Group Bhd saw a 36.5% improvement in EPS, thanks to its Malaysian operation, as the group’s associate company Pengerang LNG (Two) Sdn Bhd commenced its commercial operation last November.

CIMB Group Holdings Bhd, the country’s second largest lender by assets, also saw an improvement in EPS of 21.1% last year, which was attributed to stronger operating income, continued cost discipline and lower provisions.

Telecommunications players Axiata Group Bhd and Telekom Malaysia Bhd also made the list of top earners. Axiata attributed its growth to improved earnings before interest, taxes, depreciation and amortisation, driven by its revenue growth and cost-optimisation exercise, while Telekom recorded foreign exchange gains.

Two of the Big Four glove makers — Hartalega Holdings Bhd and Top Glove Corp Bhd — were also among the top earners, and both companies listed stronger demand as a driver of their earnings.

Big caps

Among the big caps, categorised as companies with a market capitalisation of between RM1 billion and RM10 billion, plantation players Felda Global Ventures Holdings Bhd (FGV), TSH Resources Bhd and Boustead Plantations Bhd were among the top earners.

In its latest quarterly report, FGV says the plantation sector improved significantly, helping the company make a profit of RM554.18 million in its financial year ended Dec 31, 2017, up from RM233.78 million in the previous year, on the back of a higher CPO sales margin as the commodity’s average price realised increased to RM2,792 per tonne from RM2,560 in 2016. Similarly, TSH attributed its earnings increase to higher revenue as a result of better average CPO prices and an increase in FFB production. Revenue improved 23% to RM1.07 billion last year.

Boustead Plantations saw more than a 100% gain in its 12-month EPS, thanks to a large gain on disposal of a plantation asset amounting to RM554.9 million. In its latest quarterly report, the group says that, excluding the gain on disposal of the plantation asset and a gain on disposal of a subsidiary of RM33.4 million in 2016, its net profit rose 50% from 2016.

Exceptional refining margins contributed to the earnings growth of Hengyuan Refining Company Bhd, which, in its latest quarterly report, attributes this to unplanned production outages in the global market caused by hurricanes in the Gulf of Mexico and a fire at a global-scale European refinery.

Penang-based Globetronics Technology Bhd, which develops sensors for smart mobile and wearable applications, recorded a 12-month EPS growth of 97.6%, thanks to a pick-up in volume loading from the mass production of new products for certain customers.

Property developer Eastern and Oriental Bhd also had a good run with earnings growth of more than 100% last year on the back of higher operating profit in its property segment as a result of steady work progress in its ongoing property developments and land reclamation project.

UEM Sunrise Bhd — the flagship of the township and property development businesses of UEM Group Bhd and Khazanah Nasional Bhd — reported more than a 100% increase in earnings, driven by a leap in revenue, which was the result of completed unit sales under its inventory monetisation campaign. Apart from that, UEM Sunrise also recorded contributions from the progress made in its international projects in Australia and land sales, particularly in Alderbridge, Canada, and Iskandar Puteri, Johor.

The biggest gainer in terms of 12-month earnings was another company belonging to UEM Group — UEM Edgenta Bhd. The main reason for the improvement in its earnings was the absence of impairment loss on goodwill in the previous year amounting to RM106.9 million. This was in relation to the performance of the group’s Canadian subsidiary Opus Stewart Weir Ltd’s geomatics business, which had been adversely affected by the weak global oil prices.

Mid caps

As for the mid caps — companies with a market capitalisation of between RM500 million and RM1 billion — the biggest gainer in terms of trailing 12-month EPS growth was JAKS Resources Bhd, which is involved in construction and property development. But the main reason for the improvement, apart from higher revenue recognition, was a gain on disposal of land held for development and property in Subang Jaya, which amounted to RM88 million.

MNRB Holdings Bhd, which counts Permodalan Nasional Bhd as its major shareholder, also recorded a significant jump in earnings, thanks to higher underwriting surplus in its reinsurance business and improved investment income. Its takaful subsidiary recorded a higher net profit of RM31.9 million in its financial year ended Dec 31, 2017, compared with a net loss of RM7.5 million in the previous year, mainly due to higher wakalah fees received from higher gross contributions.

Paper miller Muda Holdings Bhd, which experienced a more than 100% jump in EPS last year, attributed it to an increase in demand for the group’s paper packaging products as well as selling prices.

As for poultry company Lay Hong Bhd, it recorded a higher EPS mainly due to an improvement in revenue as a result of higher quantity and price of eggs in its latest financial quarter ended Dec 31, 2017.

Property developer Sunsuria Bhd also saw an improvement in its EPS, thanks to contributions from its property projects Bell Suites and Monet Lily, coupled with additional sales and work done at its Forum 1, Suria Residence, Bell Avenue, Jasper Square and The Olive developments.

Construction and property development outfit Gabungan AQRS Bhd was one of the top mid-cap gainers, thanks to its involvement in infrastructure projects such as the Sungai Besi-Ulu Kelang Elevated Expressway, Pusat Pentadbiran Sultan Ahmad Shah and LRT3.

Small caps

The entity with the biggest EPS growth among the small caps — defined as companies with a market capitalisation of less than RM500 million — is Timberwell Bhd. Led by Bintulu Member of Parliament Datuk Seri Tiong King Sing, it is a licence holder of the Sustainable Forest Management Licence Agreement 06/97 granted by the Sabah government. The licence covers 71,293ha of natural forest in the Lingkabau Forest Reserve in Sabah. Under the agreement, the company can plant, rehabilitate and harvest timber logs within the licensed area for 100 years commencing from Sept 10, 1997.

Timberwell attributed its improvement in earnings to an improvement in margins brought about by higher export sales.

The second top small cap EPS growth gainer last year was Straits Inter Logistics Bhd, which was formerly known as Raya International Bhd. The group attributed its increase in earnings to its diversification into oil bunkering from its prior core business under Raya International of manufacturing clean room filters and other water-filtration products.

IFCA MSC Bhd, an integrated business software and solution provider specialising in the property industry also saw a significant jump in earnings last year. In its latest quarterly report, IFCA attributes its increase in profitability to an improvement in revenue, mainly due to an overall improvement in sales contribution from its Malaysian and Chinese segments.

Amcorp Properties Bhd saw a huge increase in earnings due to contributions from its London property projects, namely Burlington Gate and Holland Park Villas, as revenue from overseas property developments is recognised upon completion and delivery of units to purchasers.