1QFY15 results were below our expectations. Downgrade to SELL (from Neutral)  with  a  lower  SOP-based  MYR1.76  TP  (from  MYR2.10,  a  12.9% downside).  Its MYR11m core net profit  – accounting for around 15% of our full-year target – fell 29% YoY on lower contribution from property development  and  apparel  retailing.  We  are  lowering  our  FY15  revenue and net profit forecasts by 12% and 19% respectively.  
 
Below  expectation.  Wing  Tai  Malaysia’s  (Wing  Tai)  1QFY15  (Jun) bottomline  missed  our  target.  Its  MYR11m core  net  profit  –  accounting for about 15% of our FY15 target of MYR11m – fell 29% YoY. The lower performance  was  mainly  due  to  less  contribution  from  both  the company’s property development and apparel retailing businesses. On a YoY basis, Wing Tai’s revenue was flat at MYR83m while  its PBT rose 72%  to  MYR36m.  There  was  an  exceptional  gain  of  MYR20m  arising from the company’s disposal of its 25% stake in Indonesian joint-venture (JV)  company  PT  Windas  Development.  After  stripping  off  the  one-off gain, PBT was 25% lower at MYR16m.

Double  whammy.  Profit  contributions  from  Wing  Tai’s  two  core businesses,  namely  property  development  and  apparel  retailing,  were lower at MYR9m and MYR5m respectively. For its property segment, this was mainly due to lower sales contribution from its Nobleton Crest, BM Utama  and  Jesselton  Hills  projects.  Meanwhile,  we  believe  that  Wing Tai’s apparel retailing business will continue to face eroding margins due to intense competition and promotion as well as higher operating costs.  

Downgrade  to  SELL  (from  Neutral)  with  a  MYR1.76  TP  (from MYR2.10).  In  view  of  the  lower-than-expected  results,  we  reduce  our FY15  revenue  and  net  profit  forecasts  by  12%  and  19%  respectively. Hence,  we  are  lowering  our  SOP-based  TP  on  the  stock  to  MYR1.76. This  was  calculated  by  applying  11x  FY15F  P/E  to  its  property development unit and 9x FY15F P/E to its retail segment.

Financial Exhibits

Financial Exhibits

SWOT Analysis

Company Profile

Wing  Tai  Malaysia  (Wing  Tai)  engages  in  property  development  and  investment  holding,  as  well  as  apparel  retailing  and  garment manufacturing.

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Source: RHB