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King Wan Corporation - FY14 Analyst Briefing Highlights
Written By Stock Fanatic on Friday, June 6, 2014 | 6.6.14
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OCBC Research attended King Wan Corporation Limitedâs FY14 results briefing yesterday. Here are some key takeaways:
FY14 PATMI declined by 4.5% to S$6.7m
Despite a 43.9% YoY increase in revenue to S$95.4m in FY14, King Wanâs PATMI decreased by 4.5% to S$6.7m. The decline in PATMI was due to higher expenses incurred, notwithstanding a 44.5% YoY revenue increase in the Mechanical and Electrical (âM&Eâ) segment. Administrative expenses rose by 43.6% to S$8.5m due to higher net allowance for doubtful trade receivables and higher net allowance for inventory obsolescence. Finance costs have also increased by 129.5% to S$0.5m due to higher utilization of bank facilities to finance its core M&E business and investments in property development.
FY14 dividend hike
The total dividend per share for FY14 will be $0.020/share, constituting a final dividend recommendation of S$0.015/share and paid interim dividend of S$0.005/share in view of KTIS listing in Thailand which values King Wanâs ~3.01% shareholding in KTIS at ~S$43m. The total dividend amount represents a payout ratio of 103.6% and a yield of 5.9% for FY14.
Solid pipeline till 2017 for its main business segment
King Wanâs main business segment â M&E contributes approximately 96.1% share to total revenue. Its current order book of S$153m provides a visible stream of revenue till 2017. The growth driver for its M&E segment is mainly attributed to government support to build more homes and infrastructures for the planned population growth.
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Workersâ accommodation â a new business segment
King Wan has entered into the workersâ accommodation business with a 19% stake in a new workersâ dormitory project. The Tuas dormitory will have a capacity of 9,200 beds and is stipulated to be completed by 2016. King Wan is expected to draw revenue from this segment over 20 years as an owner-operator. Management believes that in view of the workersâ accommodation shortage in the market, the demand and revenue outlook for this business segment is positive.
Trading at 17.3x FY14 PER
We do not have a rating on King Wan Corporation Limited. According to Bloomberg, there is currently 2 BUY rating on the stock, with a 12M target price of S$0.43 (based on coverage over the past 6 months).
Source : OCBC Research