KUCHING : Ajiya Bhd (Ajiya) is expected to perform better this year given the growing demand for energy saving building materials as more structures begin to adopt the MS:1525 building protocol.In its statement Bursa Malaysia yesterday, the Group achieved a turnover of RM78.918 million for the quarter, which was four per cent lower compared with the preceeding year’s corresponding quarter of RM82.435 million. The decrease was marginal due to the current weak market conditions.
The Group also recorded a profit before tax of RM10.103 million for the current quarter compared with the immediate preceding quarter of RM11.827 million. The company’s profit was lower due to the decrease in sales for the current quarter. The other operating income was due to contribution from small property development.
OSK Research Sdn Bhd (OSK Research) in its research report cited that as the Malaysian property and construction sectors have yet to fully digest the concept of green buildings, it does not expect Ajiya’s sales to rise sharply this year. The research house said year-on-year (y-o-y) performance was flat on lackluster demand for building materials in 2009, with the higher selling prices in the steel division and increasing demand for its value added products largely offsetting the lower sales volume.
Earnings for both top and bottom line levels were flat as well, with financial year (FY) revenue down by 1.7 per cent y-o-y while net profit declined by only 1.4 per cent. However, the net margins expanded to 7.5 per cent from 4.6 per cent (4QFY08) a year ago. Meanwhile, the higher margins bolstered net profit by a huge 55 per cent (4Q09 vs 4Q08). Nonetheless, net profits fell 20.8 per cent quarter-on-quarter (q-o-q) due to slower sales in fourth quarter, during which the implementation of Government-related projects slowed owing to the Hari Raya festivities.
OSK Research believed the higher net margins stemmed from higher product selling prices at its steel devision, coupled with higher sales of value added products.
In Ajiya’s fourth quarter FY09 results, there was an abnormal fall in the trade and creditors (-58 per cent q-o-q) figures and a steep jump in short-term borrowings (+193 per cent q-o-q), OSK Research pointed out.
It suspected that these figures may be due to data entry error as these changes were not within its expectations of its day-to-day operations. The research house was still waiting for clarification figures from the management. However, taking into account the stock’s positive fundamentals it maintained its target price at RM1.90.