KUALA LUMPUR: Wing Tai Malaysia Bhd, which is anchored by its two core businesses namely property development and apparel retailing, saw its net profit plunge 41.9% to RM8.49 million or 2.68 sen a share in the third financial quarter ending March 31, 2015 (3QFY15) — its lowest quarterly earnings in five years, on lower revenue from its property development division.
It posted a net profit of RM14.59 million or 4.64 sen a share in 3QFY14.Wing Tai’s revenue for 3QFY15 declined 26.9% to RM82.99 million from RM113.47 million a year ago.
In a filing with Bursa Malaysia yesterday, Wing Tai (fundamental: 1.5; valuation: 2.4) said for the nine-month period (9MFY15), its net profit jumped 27.6% to RM52.31 million from RM40.99 million a year ago. Revenue, however, declined 13.3% to RM249.8 million from RM288.02 million in 3QFY14. The group attributed the higher profit for 9MFY15 to gain on disposal of shares in its joint venture in Indonesia, which was completed in the current period.
The lower 9MFY15 revenue from the property development division was mainly attributable to lower revenue recognition from its Verticas Residensi project. With the lower revenue, the operating profit of the property development division was RM16.5 million in 9MFY15 compared with RM31.5 million in 9MFY14.
Revenue from its retail division, which carries brands such as Uniqlo, Topshop, Dorothy Perkins, Warehouse, Pumpkin Patch and Wallis, was also lower at RM136.3 million due to the soft market that was flushed with discounts and the weakening of the ringgit. Nevertheless, Wing Tai’s recorded share of profit from JVs grew higher to RM9.8 million from RM4.6 million previously.
The group expects to remain profitable for the current financial year ending June 30, 2015.
In a separate filing, Wing Tai has proposed to undertake a renounceable rights issue of up to 164.195 million shares, which is expected to raise gross proceeds of up to RM197 million for development expenditure and working capital, to be used within 36 months.
Wing Tai said the rights issue is on the basis of one rights share for every two existing shares held by entitled shareholders.
This article first appeared in The Edge Financial Daily, on May 6, 2015.