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Cambodia: PPSP’s profits decline in Q4 last year, but rise on annual basis
The consolidated net profits after tax of the Royal Group Phnom Penh Special Economic Zone (PPSP) of the conglomerate Royal Group of Companies have decreased 95.21 percent to about $0.18 million in the last quarter of 2022 compared to over $3.82 million in the same period of 2021, according to PPSP’s latest report released on Tuesday on Cambodia’s bourse.
PPSP’s revenue in quarter 4 has increased 18.42 percent to $3.5 million from the main sources of revenue—sales of land, service rendered, construction revenue and rental income—compared to $19.26 million in the same period of last year, while other income has declined about 24.3 percent to nearly $0.1 million from $0.37 million, according to the report.
The group’s cost of sales and administrative expenses fallen about 91 percent and 38 percent to slightly over $1 million and less than $0.1 million respectively, while its financial costs and income tax expenses have increased approximately 47 percent and 113 percent to approximately $0.45 million and $0.1 million respectively, according to the quarterly report.
Fong Nee Wai, Chief Financial Officer of Royal Group PPSP, told Khmer Times yesterday that land sales have contributed a large part of the group’s sales revenue, while its recurrent revenue has currently only made up a small part of this item and there was no land sales in the last quarter ended December 31, 2022.
“We have taken note of this weakness and we have adopted the approach of switching to the build-to-suit model whereby instead of selling land outright to our customers, we proposed to build the factory to suit our customers’ requirement. We still own the land and factory and the unit is rented out to them for a term,” Nee Wai said with an example of terms like 10 years.
Nee Wai also pointed out that the strategy would enable the group to have a recurring stream of sales revenue in the long run, definitely not in 2023 as it takes time to reach an optimal level mix. “This will not happen overnight… In the meantime, albeit a smaller amount of recurring sales revenue will still be earned from our other services provided like maintenance fees and water supply, etc.,” he said.
“Our construction arm is also expected to play a bigger role in contributing to the profits in the future,” said Nee Wai, who is also a chartered accountant and certified financial planner.
PPSP, whose stock symbol on Cambodia Securities Exchange (CSX) is PPSP, is one of the subsidiaries of Royal Group and the special economic zone developer.
However, the annual profit of PPSP has increased about 6.2 percent to nearly $2.1 million in the twelve-month period ended December 31, 2022, from about $1.97 million in the same period of 2021, according to the Quarterly Report Q4 as of December 31, 2022, that was released on CSX on Tuesday where PPSP was listed on the bourse in late May 2016.
The report also cited the staff report of the International Monetary Fund (IMF) that has projected that Cambodia’s economy to grow by around 7 percent over the next few years, while some investors appear in wait-and-see mode ahead of general elections that will be held this year and the country is on the verge of climbing up the manufacturing value chains.
“These further efforts can help facilitate higher growth. On the upside, the global outlook is favourable, public spending is increasing, construction momentum remains robust and tourism activity has picked up pace,” the report pointed out, adding that as of December 31, 2022, PPSP has a total land area of approximately 357.32 hectares that will be developed in phases.
Source: https://www.khmertimeskh.com/501240205/ppsps-profits-decline-in-q4-last-year-but-rise-on-annual-basis/