Wing Tai’s 1QFY13 results were below our and consensus’ estimates. Its RM102.7m top-line accounted for only about 19.3%/17.2% respectively of our and consensus’ forecasts, primarily due to lower profit recognition of its Verticas Residensi project during the quarter under review. Nevertheless, we are fairly positive that the company will perform better in the coming quarters. The group’s total unbilled sales reach RM245m as of end-September 2013, RM156m of which come from its Verticas Residensi project. Overall, the group’s fundamentals are underpinned by: (i) its ability to tap into its parent company’s extensive networks in Malaysia, Singapore, Hong Kong and China, (ii) its duo core businesses in property development and apparel retailing, and (iii) the tremendous growth potential in its apparel retailing, especially Uniqlo. We are maintaining BUY on Wing Tai with a FV of RM2.06, based on sum-of-parts valuation, pegged at the property industry’s average PER of 8x and the apparel retailing industry’s average PER of 8.5x on its projected FY13 earnings.
Below expectations. Wing Tai’s 1QFY13 results were below our and consensus’ estimates. Its RM102.7m top-line accounted for only about 19.3%/17.2% respectively of our and consensus’ forecasts. The lower-than-expected results were primarily due to lower profit recognition of its Verticas Residensi project during the quarter under review. Nevertheless, we are fairly positive that the company will perform better in the coming quarters, supported by its total unbilled sales of RM245m as of end-September 2013, RM156m of which come from its Verticas Residensi project. 1QFY13 revenue came in at RM102.7m (+27.4% y-o-y, -23.4% q-o-q) while earnings stood at RM18.3m (+27.5% y-o-y, +22.7% q-o-q). Generally, y-o-y performance improved on higher revenue contribution from both the property development division andretail division. The lower q-o-q revenue was mainly due to lower profit contribution from its Verticas Residensi project, while its higher bottom-line was largely attributed to stronger retail contribution of RM9.5m (versus RM6.2m in the preceding quarter) as well as higher profit share from its associates amounting to RM1.8m (+103.5% y-o-y, +276.8% q-o-q).
Retail division in expansion mode. The retail division’s 1QFY13 revenue climbed 6.5% y-o-y to RM44.4m, while its PBT edged down 3.4% to RM9.5m, probably due to additional expenses on its new store opening. As of end-1QFY13, Wing Tai has added four retail stores (excluding Uniqlo), bringing its total outlets to 73. The company plans to open 11 more outlets by FY13. Uniqlo Malaysia,the group’s 45%-owned associate, opened its fourth outlet in Sunway Pyramid on 15 November 2012 and expects to open a fifth one in Paradigm by early December this year.
BUY maintained, RM2.06 FV. Despite its lower-than-expected 1QFY13 results, we are maintaining our BUY call on Wing Tai with a FV of RM2.06, based on sum-of-parts valuation, pegged at the property industry’s average PER of 8x and the apparel retailing industry’saverage PER of 8.5x on its projected FY13 earnings. This is because we expect the group to perform better in the coming quarters, with its fundamentals remaining intact. We still like Wing Tai for: (i) its ability to tap into its parent company’s extensive networks in Malaysia,Singapore, Hong Kong and China, (ii) its reputation as a premier modern property developer in Kuala Lumpur and Penang, and (iii) the tremendous growth potential in its apparel retailing, especially Uniqlo.
Below expectations. Wing Tai’s 1QFY13 results were below our and consensus’ estimates. Its RM102.7m top-line accounted for only about 19.3%/17.2% respectively of our and consensus’ forecasts. The lower-than-expected results were primarily due to lower profit recognition of its Verticas Residensi project during the quarter under review. Nevertheless, we are fairly positive that the company will perform better in the coming quarters, supported by its total unbilled sales of RM245m as of end-September 2013, RM156m of which come from its Verticas Residensi project. 1QFY13 revenue came in at RM102.7m (+27.4% y-o-y, -23.4% q-o-q) while earnings stood at RM18.3m (+27.5% y-o-y, +22.7% q-o-q). Generally, y-o-y performance improved on higher revenue contribution from both the property development division andretail division. The lower q-o-q revenue was mainly due to lower profit contribution from its Verticas Residensi project, while its higher bottom-line was largely attributed to stronger retail contribution of RM9.5m (versus RM6.2m in the preceding quarter) as well as higher profit share from its associates amounting to RM1.8m (+103.5% y-o-y, +276.8% q-o-q).
Retail division in expansion mode. The retail division’s 1QFY13 revenue climbed 6.5% y-o-y to RM44.4m, while its PBT edged down 3.4% to RM9.5m, probably due to additional expenses on its new store opening. As of end-1QFY13, Wing Tai has added four retail stores (excluding Uniqlo), bringing its total outlets to 73. The company plans to open 11 more outlets by FY13. Uniqlo Malaysia,the group’s 45%-owned associate, opened its fourth outlet in Sunway Pyramid on 15 November 2012 and expects to open a fifth one in Paradigm by early December this year.
BUY maintained, RM2.06 FV. Despite its lower-than-expected 1QFY13 results, we are maintaining our BUY call on Wing Tai with a FV of RM2.06, based on sum-of-parts valuation, pegged at the property industry’s average PER of 8x and the apparel retailing industry’saverage PER of 8.5x on its projected FY13 earnings. This is because we expect the group to perform better in the coming quarters, with its fundamentals remaining intact. We still like Wing Tai for: (i) its ability to tap into its parent company’s extensive networks in Malaysia,Singapore, Hong Kong and China, (ii) its reputation as a premier modern property developer in Kuala Lumpur and Penang, and (iii) the tremendous growth potential in its apparel retailing, especially Uniqlo.
Source: OSK
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