Wing Tai's 1Q net profit plunges 92%, pays 3 sen dividend

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KUALA LUMPUR (Nov 17): Wing Tai Malaysia Bhd, whose retail brands include Topshop, Dorothy Perkins and Uniqlo, saw its net profit for the first financial quarter ended Sept 30, 2015 (1QFY16) plunge 91.9% to RM2.54 million or 0.69 sen a share from RM31.23 million or 9.74 sen a share, mainly due to lower operating profit from the property development division.

The apparel retailer said the lower quarterly earnings was also due to the recognition of a net gain of RM20.2 million from the disposal of shares in its joint venture (JV) in Indonesia in 1QFY15.

Wing Tai's 1QFY16 revenue also fell 10.5% to RM74.28 million from RM83.03 million in 1QFY15.

The group also declared a first and final dividend of 3 sen per share for the financial year ending June 30, 2016 (FY16), payable on Dec 16.

In a filing with Bursa Malaysia today, Wing Tai said revenue from its property development division dropped 28.6% to RM25 million in the current quarter compared with RM35 million in 1QFY15.

This was mainly due to lower revenue recognition for its Impiana Commercial Hub project in 1QFY16. On the back of the lower revenue, the property development division's operating profit also dropped 11.8% to RM2 million in the current quarter compared with RM8.5 million a year ago.

Revenue from the retail division, however, rose 2.4% to RM41.8 million in 1QFY16 from RM40.8 million in 1QFY15. The operating profit of the retail division was also 12.5% higher at RM5.6 million compared with RM4.9 million a year ago.

Wing Tai also noted that the group recorded share of loss from JVs of RM300,000 in 1QFY16 compared with share of profit of RM3.4 million in 1QFY15.

"One of the JVs has incurred loss for the current quarter as margin was affected by the weakened ringgit, absorption of 6% goods and services tax with minimal price increase and pre-operational expenses for its upcoming stores opening in the next quarter," it added.

On prospects, Wing Tai said with the current market volatility in currency and subdued consumers' sentiment, the retail and property outlook is expected to be challenging in FY16.

Wing Tai's counter dropped one sen or 0.76% to close at RM1.30 today, with a thin trading volume of 11,300 shares. Its market capitalisation stood at RM622 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)