KUALA LUMPUR: Despite a pick up in jobs over the previous quarter, Hock Seng Lee Bhd managing director Paul Yu Chee Hoe said the pandemic situation in the country remained disruptive to earnings momentum.
In a statement issued Thursday, he said the group was facing headwinds from the reimposition of various movement control orders in the country.
“Crucially, these include acute labour shortages, travel restrictions and disruptions to material supply chains.
“For projects under HSL’s current order book of over RM1.8bil, margins are squeezed as contractors are forced to accept higher costs. The same scenario is repeated in property development,” he added.
Yu also noted that construction firms are absorbing substantially higher costs for construction materials, including steel, which saw a 50% price increase in May from a year ago.
For the first quarter ended March 31, 2021, Hock Seng Lee announced a net profit of RM9.1mil, 20.38% higher from RM7.55mil in the previous corresponding quarter on higher revenue from construction activities.
Revenue for the quarter under review was RM159.5mil, 41.91% improved over RM112.4mil in the comparative quarter.
Moving forward, Hock Seng Lee is working towards replenishing its order book while looking for more efficiencies for existing projects with thinning margins.
Meanwhile, the group’s property segment continued to be soft with little sign of improvement, especially in the middle segment.
“Samariang Aman 3 (SA3) is one of our current property developments. Over 70% of units in early phases comprise single-storey units. We’re emphasising affordability,” said Yu.
He added that while it is too early to say what it will be like in the medium term, the group is preparing for the long haul.