Snippets
ELK-Desa First Quarter Profit Rises 15%
Focus Malaysia 23 Aug 2019 16:17

ELK-Desa Resources Berhad, a non-bank lender focused in the used-car segment, registered a strong start to its 2020 financial year on the back of a robust growth of its hire purchase financing division.  

For the first quarter ended 30 June 2019, the Group registered higher revenue of RM35.19 million, a 22% increase, compared to revenue of RM28.82 million registered in the corresponding quarter a year ago. Subsequently, profit before tax for the said quarter increased by 15% to RM12.28 million from RM10.72 million last year.  

The Group’s improved performance for the quarter under review was largely as a result of higher contribution from its hire purchase segment. Revenue for the hire purchase division grew by 21% to RM24.07 million from RM19.97 million in the corresponding quarter a year ago, while profit before tax of the division increased by 13% to RM11.93 million from RM10.56 million.

The stellar growth of the Group’s hire purchase receivables was the primary factor that contributed to the improved performance of the hire purchase division, which remains the Group’s core business activity and main profit contributor. As at 30 June 2019, hire purchase receivables recorded 24% increase to RM513.00 million from RM412.80 million a year ago.

In line with the Group’s capital management strategy to leverage up, total borrowing increased by 127% due to higher drawdown of block discounting payables to support the increase of its hire purchase receivables.

Despite impairment allowance increasing by 17% to RM4.50 million for the first quarter, the credit loss charge decreased from 0.97% to 0.94% primarily as a result of the stable domestic economic environment during the financial period under review and the Group's concerted efforts in credit recovery.

Teoh Seng Hee, the Executive Director and Chief Financial Officer of ELK-Desa Resources Berhad, said, “We have started our 2020 financial year on a firm note and we are now focused on maintaining this positive momentum going forward by continuing to expand our hire purchase portfolio without compromising on the quality of our assets.”

“Domestic macro-economic factors are expected to remain stable and our Group continues to operate in the niche used-car financing market. As such, we are optimistic that the Group’s performance for the year ending 31 March 2020 to be better than the previous financial year,” Teoh added.

“We look forward to Budget 2020 and we hope that the Government will put in place measures that will spur employment and personal income levels, manage inflation and the cost of living, which are significant factors that will augur well for the continued growth and success of ELK-Desa,” Teoh concluded.    



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