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Author: kltrader   |   Latest post: Fri, 15 Nov 2019, 4:55 PM

 

Yong Tai - Still in Need of a Muse

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Maintain HOLD on a lower TP of MYR0.62 (-11%)

1QFY6/19 results missed our expectation due to slower-than-expected property progress billings. While Encore Melaka positively surprised with a lower-than-expected EBITDA break-even utilization level, we remain wary as ticket sales stay weak. We are less sure on forward profitability after its property development profits are fully recognised by FY21. Ascribing a wider 20% discount to end-FY19E FD BVPS (10% previously), we lower our TP to MYR0.62 from MYR0.70.

1QFY19 results below expectations

YTB generated 1QFY19 net loss of MYR5.2m (1QFY18 net profit: MYR2.7m) which was below our and consensus expectations. 1QFY19 revenue of MYR29.1m (+10% YoY) also missed our expectation at only 8% of our full year estimate. The shortfall was due to slower-than-expected progress billings from Amber Cove and The Dawn as their construction progress is still at the ground floor level. Thus, YTB could not bill the purchasers of Amber Cove and The Dawn units by much.

Encore Melaka was not as poor as expected…

1QFY19 was the first quarter that reflected Encore Melaka contributions (reported under ‘Property investment’). We understand that it recorded average net ticket price of ~MYR110 and admitted ~40k pax. The latter translates into utilization rate of only 11% but yet, Encore Melaka generated only a minor LBIT of MYR5.8m. We understand that it even broke even at the EBITDA level. Hitherto, we were guided that the EBITDA break-even utilization level for Encore Melaka is 30-40%.

… but still not ‘out of the woods’ yet though

YTB assures that property progress billings will accelerate as construction progresses. That aside, we understand that 2QFY19 QTD Encore Melaka sales are on track, although only marginally higher QoQ (~50k pax) due to slower Chinese tourist arrivals. This implies 1HFY19 Encore Melaka utilisation rate of only 12% (MKE estimate: 20%). Despite lower EBITDA break-even utilization level for Encore Melaka, our concern is that it and thus, YTB may not generate much profit in the near term.

Source: Maybank Research - 30 Nov 2018

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Labels: YONGTAI

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