ELK-Desa Resources Bhd, a non-bank lender focused in the used-car segment, has started its 2019 financial year on a positive note due to healthy macro-economic factors and improving consumer sentiment.
For the first quarter ended 30 June 2018, the Group registered higher revenue of RM28.82 million, a 13% increase, compared to revenue of RM25.57 million registered in the corresponding quarter a year ago. Profit before tax for the said quarter increased by 55% to RM10.72 million from RM6.90 million last year, mainly due to increase in hire purchaser portfolio and significantly lower impairment allowance.
The Group’s improved performance for the quarter under review was largely as a result of higher contribution from its hire purchase segment. Revenue for the hire purchase division grew by 13% to RM19.97 million from RM17.64 million in the corresponding quarter a year ago, while profit before tax of the division increased by 54% to RM10.56 million from RM6.84 million.
One of the key factors that had led to the improved performance of its hire purchase division was the expansion of its hire purchase receivables, which recorded an 18% year-on-year growth to RM412.80 million as at 30 June 2018.
During the quarter under review, the Group’s total borrowings increased by 63% compared to the corresponding quarter a year ago due to higher drawdown of block discounting payables to support the increase of its hire purchase receivables.
Impairment allowance decreased by 41% to RM3.84 million, while credit loss charge decreased from 1.79% to 0.92%. The improvement was mainly due to a stable economic environment during financial period under review and coupled with the Group's concerted efforts in credit recovery.
The Management of ELK-Desa Resources said, “We are happy to start our financial year on a strong note and clearly, the expansion of our hire purchase portfolio has and will continue to be the key growth driver for our Group.”
“In view of the encouraging macroeconomic conditions including manageable inflation, strong labour market and improving consumer sentiment, coupled with the fact that we are still operating in an underserved niche market of second hand car hire purchase financing, we intend to maintain the momentum in growing our hire purchase portfolio further in our current financial year ending 31 March 2019.”
“We are also highly focused in ensuring that our growth will not compromise on the quality of our assets. We will continue to be prudent in managing our credit risks while continuously enhancing our credit recovery efforts.”
“In addition, our Group has adopted the Malaysian Financial Reporting Standards 9 or MFRS9 for Financial Instruments for the financial year ending 31 March 2019. The adoption of this new accounting standard will not have any material impact to the financial statements of the Group as the impairment allowances we have provided thus far are sufficient.”
Pursuant to the shareholders’ approval in the Twenty-Ninth (29th) Annual General Meeting last week, the final single-tier dividend of 3.50 sen per share for the financial year ended 31 March 2018 will be paid on 26 September 2018 to shareholders whose names appear in the Record of Depositors of the Company on 5 September 2018.
