Wing Tai’s FY13  results  beat  our  expectations,  with  earnings  of  MYR132.1m  accounting  for  119%  of  our  forecast.  The  higher  results  were mainly  due  to  higher  contributions  from  its  property  development  division  and  45%-owned  Uniqlo  Malaysia  SB.  Going  forward,  the company plans to add another 14 new outlets in the Klang Valley, Penang and East Malaysia in FY14. We are maintaining our FY14 forecasts with an unchanged FV of MYR2.77, based on a SOP valuation after applying 11x P/E to its property development segment and 9x P/E to its retailing division.   
 
Above  expectations.  Wing Tai’s FY13  results  were  above  our  expectations,  with  a  PBT  of  MYR176.8m  (+179%  y-o-y)  and  revenue  of MYR601.2m  (+30  %  y-o-y)  accounting  for  c.120%  and  104%  of  our  full-year  projections  respectively.  The  improvement  was  mainly  due  to  a higher  contribution  from  its  property  development  division,  with  total  sales  of  MYR335m  for  the  period.  The  division  reported  a  50%  y-o-y increase  in  revenue  to  MYR395.2m,  thanks  to  higher  contributions  from  the  Verticas  Residensi  and  Jesselton  Hills  projects.  The  company’s better  results  were  also  partly  due  to  higher  contributions  from  its  jointly-controlled  entities  (especially  Uniqlo  Malaysia  SB),  which  rose  to MYR8.8m  in  FY13  from  MYR4.9m  in  FY12.  On  top  of  that,  FY13  results  also  marked  the  inclusion  reversal  of  asset  impairment  of  MYR6.5m, whereas  in  FY12  it  reported  a  fair  value  loss  of  MYR6.0m  on  its  investment  properties  and  an  additional  impairment  of  MYR13m  for  the amount due from a jointly-controlled entity. After stripping off those exceptional items, normalised PBT growth was still impressive at 49% y-o-y.   
 
Stronger 4Q results. Wing Tai reported a strong set of q-o-q results in 4QFY13, as PBT surged 78% q-o-q to MYR67.7m on the back of a 3% q-o-q  increase  in  revenue  to  MYR174.0m.  On a yearly basis, 4QFY13’s EBIT of  MYR68.6m  was  169% higher  compared  to  MYR25.5m  recorded  in 4QFY12.The  stronger  results  were  due  to  a  higher  contribution  from  its  property  development  division,  primarily  from  its  Verticas  Residensi project, which was just recently completed and delivered to its buyers. 
 
Possible  lumpy  contribution  from  property  development  segment.  Following  a  strong  4QFY13  (mainly  due  the  contribution  from  Verticas Residensi),  we  expect  its  property  development  segment  to  record  lumpy  sales  in  the  short  term.  This  is  largely  due  to  other  key  property development  projects  such  Le  Neuvel  and  Nobleton  Crest,  which  have  yet  to  contribute  meaningfully  to  total  numbers  for  1HFY14.  On  a positive note, its Penang projects are showing encouraging sales.  For its Jesselton Hills Phase 2 project, buyers have snapped up 60 out of the 120 units recently launched in August.  
 
Aiming for additional 14 outlets in FY14. To date, Wing Tai has 82 retail outlets in operation. Going forward, the company plans to expand its retail presence in FY14, adding another 14 outlets (besides Topshop and Topman) in major Klang Valley malls while strengthening its foothold in Penang and looking for opportunities to expand into major towns in East Malaysia (Kota Kinabalu and Kuching). 

Maintain  BUY,  MYR2.77  FV.  We  are  maintaining  our  FY14  forecast  for  now,  with  an  unchanged  FV  of  MYR2.77.  Our  FV  is  based  on  a  SOP valuation, which is done by applying 11x P/E to its property development unit and 9x P/E to its retailing segment. The company’s fundamentals remain intact. Wing Tai is trading at a P/E of 6.2x, below its FY13 NTA of MYR3.22. 

Source: RHB