Jawala H1 net profit flat at RM6.03m amid bank account freeze

CATALIST-LISTED Malaysian timber company Jawala has reported flattish earnings for its latest half-year, even as both its subsidiary's main bank accounts and trading in its shares remain suspended.

Net profit for the six months to Jan 31 stood at RM6.03 million (S$2 million), up 1 per cent year-on-year, according to unaudited financial statements released on Friday.

Revenue rose by 12 per cent to RM24.2 million despite lower production volume, which the company attributed to higher average selling prices in the local market on an overall log shortage.

But the bottom line was done in by higher cost of sales, as well as swelling administrative costs, such as depreciation of property, plant and equipment. There was also an increase in staff expenses on bonuses and a larger headcount, the company noted.

Earnings per share came in flat at RM0.05, while net asset value was RM0.30 a share, up from RM0.24 as at July 31, 2018.

Jawala said in its outlook statement that the temporary log export ban announced in Sabah in May 2018 is not expected to have a material adverse impact on the company, as it does not export its logs and the ban does not cover processed wood products.

Meanwhile, a Sabah state government environmental review of the company's logging concessions and forest management units had no negative impact either, Jawala added.

The company - which deals in logs and timber to produce sawn timber, veneer and plywood - said that it expects "growth to be underpinned by strong demand for certified sustainable timber amid increasing international awareness of sustainability".

No dividend was recommended, unchanged from the year before.

Citing "officer-in-charge (sic) at CIMB Bank Berhad and Public Bank Berhad", Jawala disclosed in November 2018 that the main bank accounts of Jawala Plantation Industries had been suspended by regulators amid a probe by the Malaysian Anti-Corruption Commission.

It reaffirmed in an update in February 2019 that "the directors of the company are also not aware of any investigation or proceedings pending or threatened against (the subsidiary), its directors and the company's directors".

Some RM16.5 million of the company's RM28.9 million in cash and bank balances sit in the suspended accounts, according to the latest financial statements, although Jawala has maintained that business has been operating as usual at the affected subsidiary.

Trading in Jawala shares was suspended soon after the initial bank account disclosure, just five months after the company's initial public offering (IPO) on June 1, 2018, which was sponsored by UOB Kay Hian.

The counter last closed at S$0.178 or 28.8 per cent down from the IPO price.