Moving forward, outlook of the group may remain challenging given the global geopolitical risks as well as uncertainties over global economic growth. Nevertheless, REXIT is committed to its expansion strategies to bring two new customers on board in FY23 and FY24 respectively, while gaining new business from existing customers.

NOVA has around 960 outlets distributing its products currently, which is slightly below its earlier target at 980 outlets. Nevertheless, NOVA remains committed to increase its number of distributors to 1,100 in FY23 to gain more market share. We believe the additional market share brought in by new distributors will be the key driver for NOVA’s growth.

With the absence of orderbook replenishment in recent times, we expect a softer performance in the construction segment, while the balance EPC works at Vietnam is expected to be recognised only in 2HFY23. Moving forward, outstanding orderbook of more than RM200.0m will provide revenue visibility over the next 2 years. Meanwhile, JAKS tenderbook remain relatively unchanged at RM4.00bn, mainly in water infrastructure and building-related works.

Outlook remain challenging amid the rising building material costs continues to affect the margins in the general construction industry. Moving forward, their outstanding construction orderbook of RM442.0m (as at end-2QFY22) will provide earnings visibility over the next 2-3 years.

In view of the rising cost of materials, we note that SCOMNET has performed a revision on their products pricing in April 2022. To keep margins intact and little signs of tapering of inflationary pressure, the second revision of product pricing were also performed during August 2022. Moving forward, we reckon that net margins could chalk in slightly above 20.0% mark in subsequent quarters amid the favourable exchange rates, coupled with the gradual introduction of new medical devices that yields decent margins.

The construction of the second jetty at Sapangar Bay Oil Terminal (SBOT) is largely on track for completion in 4Q22 in bid to ease the current congestion and reduce vessel waiting time. Upon completion, SBOT will be able to handle 2 vessels at the time and accommodate vessels up to 60,000DWT (from 30,000DWT previously).

Moving forward, we expect the medical segment to remain as the key contributor to the overall group revenue. On the operational standpoint, SCOMNET will be undertaking multiple launches of new products within the healthcare equipment and automotive sector in line with the growing demand. We expect demand for medical devices to remains healthy in line with the rising cardiovascular diseases which is the leading cause of death globally, affecting approximately 17.9m of the global population yearly.

That said, we do not foresee a major reversal of impairment allowance on hire purchase in the upcoming quarter. The hire purchase segment’s growth should rely on a higher hire purchase receivables as ELKDESA aims to gradually bring its hire purchase receivables portfolio towards pre-pandemic levels. Its hire purchase receivables increased 7.3% QoQ to RM502.2m.