General Elections Could Have Affected 2Q18 Performance

• Regal International reported revenue and PATMI of RM18.06m and RM0.13m respectively for 2Q18. Both sales and profitability fell year-on-year.
• We reckon that the lower revenue was due to the completion of certain projects in 2017 and, to some extent, the Malaysian General Election held on 9 May 2018. In the run-up to the Election and shortly after Pakatan Harapan’s victory, property buyers probably stayed on the side-lines to avoid exposure to political risk.

Expenses Fell Following Cost Reduction Efforts

To compensate for the lacklustre performance of 2Q18, Regal International further reduced costs with distribution and administrative expenses falling by a combined RM1.4m or 18.3% year-on-year. Share of profit from associates also turned positive, following marginal losses last year.

Regal International’s effective tax rate continued to be high at 61.4% of profit before tax.

Source: Tayrona Financial Research - 23 Aug 2018