KUALA LUMPUR: Elk-Desa Resources Bhd
, which operates in the used car financing market, says demand in the niche and underserved market continues to outstrip supply.
However, the lender is not expecting a sharp expansion in its hire purchase portfolio in view of the macroeconomic uncertainties within our operating landscape, said executive director and chief financial officer Teoh Seng Hee.
"While the domestic economy is resilient, Malaysian consumers, especially in the M40 and B40 segments, are experiencing higher cost of living and tighter disposable incomes.
"We are concerned that this may impact their propensity to purchase ‘big ticket’ items such as a used car and furniture or affect their ability to repay loans," he said in a statement.
Moving forward, Teoh said the group will be focused on further reducing its impaired loans ratio through its credit recovery processes, while it works towards expanding its hire purchase receivables in a measured manner to protect the quality of its assets.
In the second quarter of its financial year ended Sept 30, 2023, ELK-Desa posted a net profit of RM8.84mil, which was a slide from RM11.53mil in the previous corresponding quarter due to lower contribution from its hire purchase and furniture segment.
The lender's earnings per share fell to 1.94 sen from 2.53 sen in the comparative quarter.
It said revenue was RM39.2mil, up from RM36.04mil in 2QFY23 on higher contribution from the hire purchase segment.
In line with this, the board of directors declared an interim dividend of two sen per share, which will be paid on Dec 18, 2023, to shareholders appearing in the record of depositors as at Dec 7, 2023.
For the six months period, the group's net profit was RM17.34mil, compared to RM29.12mil in the year-ago period while revenue was slightly higher at RM78.38mil compared to RM74.99mil previously.
As at end-September 2023, the group's hire-purchase receivables stood at RM588.81mil, which was 13% higher than in the previous year.
The group's bank borrowings increased 23% as a result of higher drawdown of block discounting facilities to support the increased hire purchase receivables.
Nevertheless, the group's gearing remained at a manageable level of 0.52 times as compared to 0.43 times a year ago.
