KUALA LUMPUR: ELK-Desa Resources Bhd's net profit decreased to RM8.84 million in the second quarter financial year ended September 30, 2023 from RM11.53 million in the previous corresponding quarter due to lower contribution from its hire purchase and furniture segment.
In a filing with Bursa Malaysia, it said revenue was up 8.8 per cent to RM39.2 million, from RM36.04 million due to higher contributions from the hire purchase segment.
In line with this, the board of directors declared an interim dividend of two sen per share, which will be paid on December 18, 2023, to shareholders appearing in the record of depositors as at December 7, 2023.
For the six months period, the group's net profit was RM17.34 million, compared to RM29.12 million in the year-ago period while revenue was slightly higher at RM78.38 million compared to RM74.99 million previously.
As at end-September 2023, the group's hire-purchase receivables was higher by 13 per cent to RM588.81 million.
The group's bank borrowings increased 23 per cent as a result of higher drawdown of block discounting facilities to support the increased hire purchase receivables.
Nevertheless, the group's gearing remained at a manageable level of 0.52 times as compared to 0.43 times a year ago.
For the Hire Purchase segment, ELK-Desa is confident that demand for used car financing will continue to out-strip supply, more so within the niche and underserved used car financing market that it operates in.
In the current financial year FY2024, the company is not expecting a similar sharp expansion in view of the macroeconomic uncertainties within its operating landscape.
In addition to inflationary pressures, the used car financing industry may also require process changes to adapt to the new regulatory oversight by the Consumer Credit Oversight Board, which is expected to come into effect in 2024.
"We have observed a downward trend in the impaired loans ratio from the peak during the pandemic period. In FY2024, we will remain focused on further reducing this ratio.The remarkable performance in FY2023 was due to the high levels of reversal of impairment allowances in the first half of FY2023, it said in a statement today.
These exceptional reversals are not expected to continue into FY2024 and as such, the company does not expect its performance to exceed FY2023.