Towards Financial Freedom
King Wan - Good Things Are Worth The Wait
King Wan's (KWAN) 1QFY14 was above expectations with revenue at SGD25.1m. Its net profit of SGD2.6m is equivalent to half of the core 1.5-cent dividend. We note that the company's new development property, Skywoods, should be launched in 2QFY14. KWAN also issued an update on the status of the KTIS IPO, which should go live within six months. Maintain BUY with a TP of SGD0.43 based on a 7% yield.
- Strong core operations. KWAN's mechanical & electrical (M&E) division delivered another strong quarter as revenue surged 94% y-o-y to SGD25.1m at a gross margin of 15.4%. While the y-o-y margin is down from 18.8%, this is a normalised level reflecting fewer high-margin projects. The bottomline expanded by 81% y-o-y on the back of the high volume of work, with net margins stable at 10.2% vs 10.9% a year ago.
- Skywoods to launch after lunar seventh month. The Dairy Farm Road project, named Skywoods, is ready to be launched. In deference to Chinese tradition, KWAN is holding off on the launch until the Hungry Ghost Festival is over in September. Thus, we expect property-related income to be factored into its books in the next quarters.
Source: OSK
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