Slow sales eat into developer’s profit

Impressive: Naim sales and marketing general manager Tony Lau during the launch of the Sapphire on the Park last year.

KUCHING: Naim Holdings Bhd says it will adopt a cautious approach, especially on product launches and product types, as the group’s earnings have been dragged down by slower sales of properties and losses incurred by its construction arm.

In the first quarter ended March 31, 2015, the property developer’s group pre-tax profit fell to RM21.3mil from RM101.9mil in the previous corresponding period as revenue declined to RM126.7mil from RM154.1mil.

The huge profit previously included a gain of RM61.7mil from the disposal of partial equity interest in Naim’s associate company Dayang Enterprise Holdings Bhd.

In the quarter under review, the property segment recorded revenue of RM51.3mil, which was a drop of 27% from RM70.2mil before. Slower take-up rate in high-rise condominium and high-end commercial and landed properties had been reported due to the various cooling measures implemented by the authorities to curb speculations.

Profit slumped to RM11.8mil from RM26.5mil previously due mainly to lower contributions from the substantially completed projects.

However, the group reported higher level of new sales of about RM40mil against RM26mil during the same period, Naim said in explanatory notes to its latest quarterly results.

Naim said its construction segment was in the red with losses of RM500,000 in the quarter under review, a reversal from a RM6mil in profits previously as revenue fell to RM65mil from RM75.7mil.

Among the new property projects launched last year were the “Sapphire on the Park” condominium, a component of the Kuching Paragon integrated development in Batu Lintang here, “Bahagia Residences” – the group’s first apartment development in Miri, and “The Peak“ condominium, the first residential component of the billion-ringgit Bintulu Paragon integrated development.

“The drop (in profit) was partly due to lower contribution from certain construction projects being substantially completed during 2014. Revision in the contract sum of some construction projects for variation orders/provisional items has also led to the drop in segment revenue and profit,” it explained.

“Product planning and pricing as well as tightening of costs control are among the key measures to be implemented in order to sustain the performance of our property segment in the near team.”

On the construction segment, the company said it had put in place various proactive measures to tighten cost and improve efficiency to closely monitor operational costs and improve construction margin.

“At the same time, stirct monitoring on the progress of projects is implemented to ensure they are on schedule. We are also in the process of improving risk management and tightening internal contyrol for the construction segment.”

Naim said it was cautiously optimistic of securing some of the several seizable construction tenders it had submitted to replenish its order book which currently stood at more than RM1bil.

Meanwhile, Dayang Enterprise Holdings Bhd has posted higher group’s pre-tax profit of RM45.8mil on expanded revenue of RM190.1mil in the first quarter from about RM44mil and RM177.4mil respectively in the previous corresponding period.

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