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Sapphire Corp Q1 net profit falls 16.6% on interest costs and lower revenue

MAINBOARD-LISTED Chinese infrastructure player Sapphire Corp's bottom line took a big hit in the first quarter as higher rental income and government grants could not make up for lower revenue and swelling finance costs.

Net profit came in 16.6 per cent lower year on year in the three months to March 31, at 3.39 million yuan (S$683,000), according to results released on Monday.

Meanwhile, revenue slipped by 2.2 per cent to 297 million yuan, which the group attributed to lower sales of railway sleepers, even as the higher rent and grants bumped other income up from 1.32 million yuan to 2.03 million yuan.

Sapphire Corp’s key operating subsidiary is China-based Ranken Infrastructure, which carries out large-scale urban infrastructure projects in China, Bangladesh, India and Saudi Arabia.

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Still, the group also saw other expenses jump by 10.7 per cent to 2.84 million yuan in the quarter on higher depreciation, while finance costs surged from 3.77 million yuan to 5.75 million yuan on the back of interest expenses at banks and financial institutions.

Sapphire Corp said that it plans to take a two-pronged growth strategy that combines engineering, procurement and construction and design, construction and operations with rail projects, as well as breaking into environmental conservation and water projects.

“In addition to our strengths in urban railway infrastructure construction, the group has built up a growing track record by successfully completing many iconic city water environmental projects in China,” Sapphire Corp said in its outlook statement.

Earnings per share came in at 1.04 fen, down from 1.25 fen previously, while net asset value was 156.04 fen a share, against 155.15 fen as at Dec 31, 2018.

No dividend was recommended, unchanged from the previous year.