KUALA LUMPUR (July 28) : Gadang Holdings Bhd returned to the black in the fourth quarter ended May 31, 2021, by posting a net profit of RM3.7 million from a net loss of RM259,000, driven by profit from its construction and utility divisions.

Gadang said in a bourse filing today that its quarterly revenue rose 31.78% to RM152.33 million from RM115.6 million a year ago

The group has proposed the first and final dividend of 0.3 sen per share for the financial year ended May 31, 2021. The entitlement and payment dates of the dividend will be announced at a later date.

The group, which is involved in construction, property and utility businesses, said its profit before tax for the construction segment in the second quarter increased to RM1.23 million compared with RM620,000 in the preceding year's corresponding quarter. Its profit before tax in the utility segment also increased to RM7.33 million from RM4.9 million in the preceding year, mainly due to lower operating costs in the current period.

For the full year ended May 31, 2021 (FY21), the group’s net profit plunged 71.1% to RM10.25 million from RM35.46 million a year earlier, while its revenue slipped 14.61% to RM574.75 million from RM673.06 million.

Moving forward, the group said the economic situation is challenging with outcomes depending largely on the duration of the Covid-19 pandemic, economic recovery and political situation.

“The group anticipates continuing disruptions on the overall market environment. Given the constantly changing business environment, the group expects the coming financial year to be as challenging as the current financial year,” it said.

It said throughout FY21, the construction sector posted a steady decline in growth with minimal roll out of new construction contracts.

The stringent implementation of Covid-19 containment measures to minimize workplace infection risks had resulted in significant interruptions to the progress of work, it added.

“Order book replenishment prospects are expected to be challenging due to the reduction in government infrastructure spending. The revival of some major infrastructure projects such as Mass Rapid Transit 3 will play a crucial role in pump-priming the domestic economy in times of a downturn,” it said.

As of the reporting date, the group’s construction division’s outstanding order book stands at RM425 million.

Meanwhile, the Covid-19 pandemic in Indonesia did not significantly impact the utility’s division concession water treatment assets there.

It said, the operations and maintenance of the water treatment plants are going on uninterrupted.

The group's hydro power plant in Sumatera, Indonesia has achieved above 90% physical project completion, it added.

“However, the current pandemic situation in Indonesia has impacted the project’s progress, including the commissioning of the plant. Upon commissioning the power plant, the investment is expected to generate recurring income for the group,” it said.

Gadang was unchanged at 37.5 sen today, valuing the group at RM273.02 million.