KUCHING: Hock Seng Lee (HSL) today announced financial results for 2021 first quarter ended March 31. The Group posted pretax profit of RM12.23mil from revenue of RM159.5mil.
Construction activities contributed the bulk at RM141.95mil, which is 89% of revenue. Property development delivered RM17.29mil.
The preceding year’s same quarter pretax profit was RM10.13mil with revenue of RM112.4mil. In 2019, Q1’s pretax profit was RM18.76mil and revenue was RM146.7mil.
Work has picked up compared to the fourth quarter of 2020, however, momentum is interrupted by the reimpositions of new variations of Movement Control Orders in many parts of Malaysia and Sarawak.
Issues from 2020 arising from Covid-19 have not dissipated, managing director Datuk Paul Yu Chee Hoe said.
“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.”
Industry-wide, construction firms are absorbing substantially higher costs of construction materials. Steel, for instance, Yu noted, had gone up 50% in May this year from a year ago.
The sharp rise is brought about by the worldwide shortage of raw materials due to pandemic coupled with the regional resumption of business activities, particularly in mammoth economies like China and the US, where the new administration is spearheading a once-in-a-generation infrastructure boom.
“Meanwhile, Covid-19 continues its torment worldwide. The world as a whole is still recording new highs of infection rates and fatalities,” Yu said.
“Malaysia, and Sarawak within it, has not fared well in 2021 as far as fighting the pandemic is concerned.
“In fact, this year’s infection and deaths are higher than 2020 due to new waves and virus mutations. Many countries have started mass vaccinations including Malaysia but vaccine shortages and slow rate of vaccination remain an issue.”
Although the Malaysian economy is forecasted to grow positively in 2021 — versus a contraction of 5% to 6% in 2020 — the pandemic remains a great challenge presenting many new uncertainties, Yu added.
Nevertheless, HSL completed a substantial amount of projects in 2020. The mega projects of Miri Wastewater Project is at its tail-end, while more than two-thirds of the Package Seven for the Pan Borneo Highway is completed.