Fajarbaru earnings dragged down by its property development segment

Fajarbaru Builder Bhd’s property development segment has dragged down its earnings in the current nine months financial period.

The group said the movement control order (MCO) had affected the overall progress of its on-going project, Rica Residence @ Sentul.

It said during the period of inactivity, construction work progress and sales (74 per cent) remained largely unchanged.

Rica Residence @ Sentul is a freehold condominium located at Jalan Perhentian comprising 33 and 39 – storey towers.

The project with a gross development value of RM270 million has 473 units with built-ups ranging from 650 sq ft to 1,200 sq ft.

The project opened for sale in December 2016, at prices starting from RM620 per square feet (psf).

Fajarbaru said in a filing with Bursa Malaysia that it will delay the launch of new projects this year until the market condition improves.

Outside Malaysia, its project in Melbourne, Australia, Northcote Townhouses, is progressing well, it said.

“The sales rate is at 92 per cent and construction works are progressing well and scheduled to complete by the end of the year.

“Ongoing efforts to sell the remaining units are in progress,” it said.

Northcote Townhouses comprises 15 units of two-storey townhouses along Merri Creek in Northcote.

Looking forward, Fajarbaru said the Covid-19 pandemic would significantly impact the Malaysian economic outlook for 2020 as strict measures to contain the spread will affect domestic growth.

The group expects the current situation to resume normalcy once all sectors of the economy restart operations.

“Bank Negara announced that gross domestic product is projected at between -2.0 per cent to +0.5 per cent in 2020 brought about by the pandemic. The country’s economy is only expected to rebound in 2021 yet risks will remain as the Covid-19 situation is unprecedented.

“While the group’s operations have been adversely affected, we will continue to explore more business opportunities and are committed to continuing capitalising on the group’s strengths to generate sustainable revenue from the existing or new businesses,” it said.

For the third quarter ended March 31, 2020, the group recorded a revenue of RM53.1 million compared to RM70.4 million in the preceding year corresponding quarter. The drop in revenue of 25 per cent is mainly from the property development segment as well as the logging and timber trading segment.

The property development segment posted lower revenue of 56.2 per cent for the quarter under review to record RM7.5 million as versus to RM17.1 million in comparison to the preceding year corresponding quarter.

The pre-tax profit also recorded a decrease for the three months, from RM5.6 million in the preceding year corresponding quarter to RM100,000 in the current year quarter.

Fajarbaru noted that the lower revenue and pre-tax profit were due to the lesser work progress from Rica Residence @ Sentul as it is nearing its completion stage.

Source: NST