Aspen Group Holdings has reported profit before tax of RM74.9 million ($24.6 million) for the 3QFY2020 ended September compared to a loss of RM2.5 million in the preceding quarter.
In its business update, the group says the profit came due to operating revenue generated during the quarter despite the negative impact of the Covid-19 pandemic, which “severely restricted” sales and marketing activities as well as construction activities.
According to the group, the higher profit before tax was primarily attributable to the share of profit from its associated company which revalued its investment properties during the quarter and recognized a gain on revaluation of investment properties.
Revenue for the 3QFY2020 stood at RM62.4 million, 12.4% up from the RM55.5 million reported in 2QFY2020. The increase was contributed by the higher number of units sold in Tri Pinnacle and Vervea as well as the progressive construction of Beacon Executive Suites and Vertu Resort during the Recovery Movement Control Order phase.
The group adds that its return to profitability was due to several factors including the stimulus measures announced by the Malaysian government. This included the recent stimulus measures announced for the property sector on June 7.
The Penang state government, which announced a reduction in the minimum price for foreigners to purchase property in Penang, is expected to see a higher investment in properties from foreigners in Penang.
Bank Negara Malaysia has also reduced the overnight policy rate by lowering the cost to own property and loan interest rate for purchasers.
Vertu Resort, which is targeted to be completed and handed over in early FY2021, will boost the group’s revenue for FY2020.
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Several marketing efforts, which included advertising via new e-commerce platforms and social media, helped reach out to potential purchasers during the period.
The group added that its on-going projects, Vertu Resort, Beacon Executive Suites, Vivo Executive Apartment and Viluxe, with a total unbilled sales amounting to RM594.8 million as at Sept 30, will further contribute its earnings for the financial year ending Dec 31.
Following these, the group says it is “optimistic” on maintaining profitability for the financial year ending Dec 31.
The company, which completed its placement on Nov 18, will use the funds for the construction of phase one of the glove manufacturing facility. The facility is expected to be completed by 1Q2021.
The group targets to commence production by 2Q2021 to bring some 1.6 to 1.8 billion gloves annually to the market.
With the inception of the gloves manufacturing segment, the group says it will be creating at least 3,500 employment opportunities to the locals and neighbouring states.
See: Aspen Group in JV with Oxley to develop integrated project in Penang
On the increasing demand of gloves in the global market, Aspen says its glove business has been receiving “tremendous responses” from various global market supply chain buyers who have shown “strong interest” in buying and committing to forward purchasing the entire production of Aspen Glove Sdn Bhd up till 2023.
In the months of October and November, the group’s food and beverage subsidiary Kanada-Ya opened its second and third outlets at Change Alley Mall and Marina Square respectively. The group says it plans to open an additional Kanada-Ya ramen outlet in Singapore by 4Q2020.
Once all four outlets are operating fully, the group is targeting a revenue of $8 million per year.
In its outlook statement, the group says group earnings and operating cashflows may continue to face headwinds from the disruptions to businesses due to the Covid-19 pandemic.
“The group is prudently managing its expenses, cashflow and liquidity… by seeking out new opportunities that will strengthen its capabilities and competitiveness in key markets,” it says.
Shares in Aspen closed 0.5 cent lower or 1.9% down at 26 cents on Dec 1.