KPS Depends On Asset Disposal To See Improvement

Kumpulan Perangsang Selangor Berhad’s reported profit attributable to owners of the parent of RM48.5 million for the quarter ended 31 March 2024, a significant increase from the corresponding quarter of the previous year (“Q1 FY2023). The group attributed the rise to increase in the operating profit resulting mainly from the gain from the divestment of 50% of its equity stake in Kaiserkorp Corporation Sdn Bhd, the parent company of King Koil Manufacturing and King Koil Licensing in March 2024.  
                              
The group added despite the reduced risk of a global recession, the recovery was still uneven across the sectors. Various factors, including geo-political risks, elevated interest rates, and declining household savings, dampen consumer spending, putting pressure on demand for products in various industries as inventories build up. This has led to inconsistent sales volumes and revenue generation for KPS’ manufacturing companies, impacting the Group’s overall revenue growth.
 
The manufacturing segment recorded a 6% decline in year-on-year (YoY) revenue, contributing RM213.9 million to the Group, compared with RM227.5 million in the corresponding quarter of the previous year. At RM213.9 million, the manufacturing businesses, which include Toyoplas Manufacturing (Malaysia) Sdn Bhd (“Toyoplas”), MDS Advance Sdn Bhd (“MDS”), Century Bond Bhd (“CBB”), CPI (Penang) Sdn Bhd (“CPI”), and KKMW, accounted for 82% of the Group’s total revenue.
 
Following the disposal of a 50% equity stake in Kaiserkorp in March 2024, KKMW contributed to the Group’s revenue for only two months, totaling RM21.2 million.
 
Toyoplas remained the Group’s largest revenue contributor despite a decline of RM11.2 million, bringing in RM70.3 million this quarter compared with RM81.5 million in the corresponding quarter last year. This decrease was attributed to elevated inventory levels held by its major customers from the previous year. MDS also showed a slight reduction of RM1.6 million from RM5.8 million in the corresponding quarter last year, impacted by heightened customer inventory levels.
 
For the quarter under review, other income was RM117.8 million, reflecting an increase of RM95.9 million from RM21.9 million in the same quarter last year, driven by the gain from the disposal of a 50% equity stake in Kaiserkorp. Other expenses increased to RM104.5 million from RM65.1 million in Q1 FY2023, primarily due to the implementation of a long-term incentive plan rewarding employees for achieving specific goals that are aligned with the Group’s corporate objectives.  Reflecting this, the Group’s operating profit rose to RM65.4 million compared to RM12.0 million in the corresponding quarter of the previous year.
 
KPS reported a higher profit after tax of RM50.3 million, a significant increase from the RM2.9 million recorded in the corresponding quarter last year. Similarly, its PATAMI increased to RM48.5 million from the previous year’s corresponding quarter.  

The state owned entity completed the divestment of its 50% stake in Kaiserkorp, realising RM271.5 million. This strategic move strengthened KPS Berhad’s financial position, enabling the Company to repay borrowings and distribute special dividends to the shareholders. The shareholders received on 30 April 2024 a special dividend of 4.5 sen per ordinary share, amounting to RM24.2 million.

It now anticipates a gradual improvement in market sentiment in 2024, stemming from both global and domestic economies rebounding in specific sectors, expected to be driven by an incremental rise in customer demand.

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