Yong Tai reported a net loss of RM9.8m for 4QFY21 to snap a 3-quarter profit streak. Cumulative FY21 net loss of RM8.2m is a disappointment and has missed estimates, though unavoidable given re-imposition of movement restrictions during the period which disrupted site construction progress. Even as the Encore Melaka theatre has remained shuttered for about 18 months now owing to pandemic-related restrictions, development-related contributions are providing mitigating effects with income recognition picking up in tandem with projects reaching more advanced stages. Upside may come from more significant headway made in its vaccine-related venture and its recent foray into gold-mining, both of which we have not accounted for in our estimates. Re-opening of the Encore Melaka theatre will provide a further boost to sentiment. While there appears to be a relatively attractive share price upside to our sum-of-parts derived target price of RM0.31, we retain our Neutral call for now given the lack of near-term re-rating catalysts.

• Property development revenue surged 204.6% YoY to RM113.6m for FY21 as the Group progressed to more advanced stages of its construction works (when not hamstrung by the various Movement Control Orders. Correspondingly, the segment managed to turnaround with a pretax profit of RM14.9m versus the pretax loss of RM13.1m in FY20. Near-term focus of the Group will be on clearing its unsold inventories, and completing its on-going development projects. Status of the Group’s projects:

• Encore Melaka remains closed. While the theater has managed to generate rental income from advertising space, non-operating expenses (depreciation of building, amortization of intangibles and finance costs) continue to weigh heavily. FY21 pretax loss is at RM17.6m, though narrowing from RM28.7m in FY20.

• The Group’s vaccine-related venture continues to make good progress. It is expected that the enrolment of 3,000 volunteers for the Phase III Clinical Trial will be completed by the end of this month. Pending interim data, necessary regulatory applications will be made for conditional registration approval for adoption in Malaysia. To note, 14m doses of Shenzhen Kangtai’s vaccines have already been administered in China with no adverse reactions, demonstrating a good safety profile.

Source: PublicInvest Research - 30 Aug 2021