Quick take: Yong Tai shares fall after posting its first annual loss in five years

KUALA LUMPUR: Shares in YONG TAI BHD fell more than 8% in early trade Wednesday after the group posted its first annual loss in five years.

The tourism and cultural related property developer fell 8.51%, or two sen to 21.5 sen with 1.99 million shares traded. Yong Tai-PA declined 7.89% to 17.5 sen while Yong Tai-WA tumbled 22.22% to 3.5 sen.

Yong Tai posted a net loss of RM79.26mil for the financial year ended June 30,2019 (FY19), compared with a net profit of RM15.51mil in FY18.

Its revenue for the period fell 23% to RM100.4mil from RM130.09mil.

“FY19 results impacted by one-off impairment loss on inventories and receivables amounting to RM59.93mil, as well as non-cash depreciation and amortisation of the Encore Melaka Theatre amounting to RM12.8mil, ” Yong Tai said.

In the fourth quarter ended June 30, the group posted a net loss of RM62.87mil against a net profit of RM5.45mil in 4QFY18. Its revenue fell 65% to RM9.98mil from RM28.27mil.

As at June 30, Yong Tai has a total unbilled sales of RM410mil, and it should give the company earnings visibility for the next two years.

AllianceDBS has revised down Yong Tai’s FY20/21F earnings to a net loss of RM11mil/RM3mil from RM3mil/RM21mil profit previously, as it remove the contribution from Terra Square

which was earlier expected to be sold to a prospective buyer.

The research house said the less-than-satisfactory ticket sales at Encore Melaka would continue to be a major drag on YTB’s financial performance.

“While we believe it should improve as the group focuses more on its marketing campaign, Yong Tai will need much better ticket sales to break even.

“The group is now looking for strategic investors to jointly operate Encore Melaka in order to boost the theatre’s profile across Asia, ” AllianceDBS said.

The research house has reiterated its hold recommendation with a lower sum-of-parts (SOP)-derived target price of 22 sen.

This is after removing the value of its retail mall, Terra Square, of which the construction work has been halted since mid-2018 due to the default of its Chinese buyers.

“We believe that there are limited catalysts for Yong Tai in the near term, especially after the disappointing performance of Encore Melaka, which was initially expected to be a key asset generating strong recurring cash flow, ” AllianceDBS said.

Source: TheStar