KUALA LUMPUR: ELK-Desa Resources Bhd's net profit rose 116.2 per cent to RM 4.97 million in the first quarter (Q1) ended June 2021 from RM2.30 million a year ago.
ELK-Desa said its revenue had increased three per cent to RM31.37 million compared to RM30.40 million a year ago.
"This was due to the significantly higher contribution from the hire purchase segment for this quarter against the corresponding quarter a year ago when its operations were impacted by the first Movement Control Order (MCO) in March 2020," it said in a statement.
However, the company's hire purchase receivables as at June 30 this year stood at RM508.87 million, 10 per cent lower than the previous year.
Its bank borrowings decreased 11 per cent mainly due to repayment of block discounting facilities and term loans while MTNs (medium term notes) were reduced by 48 per cent due to a redemption of a senior note on its maturity date in the last financial year.
ELK-Desa said its gearing remains at a manageable level of 0.52 times.
Executive director and chief financial officer Teoh Seng Hee said the on-going Covid-19 crisis that resulted in the MCO in the Klang Valley had caused disruptions to the company's business and operations.
Teoh said the MCO was expected to impact the company's performance in the immediate or short term as it was not allowed to operate.
"Demand for hire purchase solutions may still be strong as Malaysia's overall economic fundamentals remain resilient. Nevertheless, the prolonged MCO may eventually hamper our customers' ability to fulfill their loan obligations," he said.
Teoh said ELK-Desa was maintaining its cautious stance to protect the quality of its assets while ensuring that its hire purchase receivables does not decline any further.
"In addition, the company will also remain vigilant in credit risk management while continuing to improve operational efficiencies and optimise operating cost," he added.