TOURISM-RELATED property developer Yong Tai Bhd has recorded a net loss of RM135.34 mil in its 4Q FY6/2022 (4Q FY6/2021: RM9.82 mil), which brought its full-year net loss to a gargantuan RM346.67 mil (FY6/2021: RM8.29 mil).
The dismal 4Q FY6/2022 performance was attributed to mainly recognition of impairment loss on hotel buildings, intangible assets, inventories and other receivables totaling RM113.1 mil during the quarter.
Aside from that, the property development segment also posted a weaker financial performance due to escalating costs as a result of COVID-19-led supply chain disruptions, a shortage of foreign labour and the rising cost of building materials.
However, there were signs of recovery, as seen by a 47.5% rise in Yong Tai’s revenue to RM46.24 mil during the quarter under review (4Q FY6/2021: RM31.35 mil).
“It has been a challenging period for the group as both the property development and tourism industry were severely affected by the COVID-19 pandemic and the restrictions imposed to contain the spread of infection,” commented Yong Tai’s chief executive officer (CEO) and executive director Datuk Wira Boo Kuang Loon.
Aside from what is deemed as a kitchen-sinking exercise, Boo also shared that the group has taken various measures to mitigate the impact on its earnings and cash flow.
In fact, Yong Tai has managed to return to a positive operating cash flow of RM45.4 mil in FY2022 from a negative cash flow in the previous year.
Boo is of the view that the impairment done was timely as it would clean up Yong Tai’s book with a combination of lean and quality assets for the recovery ahead while putting the group in a good position to tap on the post-pandemic recovery.
During its FY6/2022, Yong Tai has also completed its share consolidation exercise with a total of 1.43 bil shares consolidated into 285.5 mil. He said this will help to enhance the group’s profile among investors as it increases the reference price per Yong Tai share.
It will also potentially reduce the volatility of the trading price for YTB shares, encouraging investors to focus on long-term investment prospects.
“Completing ongoing projects”
Moving forward, Boo shared that Yong Tai’s strategy is to focus on the completion of its ongoing property development projects such as Amber Cove and Impression U-Thant.
“Amber Cove and Impression U-Thant are on track to be completed and deliver the vacant possession by 4Q 2022 and 1Q 2023 respectively. Upon completion of Amber Cove, the estimated billings and collection of RM50 mil will further improve the group’s operating cash flow,” he projected.
“With total unbilled revenue of RM206 mil as of end-June, the property development segment will provide earnings visibility to the group over the next two financial years.”
Aside from that, Boo said Yong Tai has also shifted its strategy for the Encore Melaka theatre in response to the pandemic. Encore Melaka will serve as a one-stop solution for all event staging needs and even cater to outdoor activities, marketing and ticketing sales.
The shift in strategy from the previously focused Impression Series is expected to benefit from the re-opening of the international borders and easing of the traveling process into Malaysia.
As for the Courtyard by Marriott Melaka, targeted to commence operations by the end of October, Yong Tai is optimistic that this new hotel will generate an additional revenue stream for the group with the festive year-end season approaching and the high tourist arrival rate.
On its vaccine distribution venture, Boo said Yong Tai has completed the Phase III clinical trials for its COVID-19 vaccine in Malaysia.
“Our strategic partner, Shenzhen Kangtai Biological Products Co Ltd, is in the midst of conducting data analysis for its multinational clinical trial,” he updated. “In the meantime, the group is exploring the distribution of other healthcare products and vaccines to generate diversified revenue streams for the group.”
As for its gold mining operation, Boo said Yong Tai will not proceed with the venture due to the unsatisfactory indicative results from its gold exploration works.
“Overall, we expect the business environment to remain challenging in our FY6/2023 amid the uncertainty in the global economic recovery,” he envisaged. “Nonetheless, we will continue to scout for strategic locations that fit into the long-term plans for our property development business.”
In addition, Yong Tai will explore new property development projects via the acquisition of lands or joint ventures with landowners. Aside from that, the group will continue to be on the lookout for any other business opportunities to diversify its income stream and strengthen its competitive edge.
At the close of yesterday’s (Aug 26) trading, Yong Tai was unchanged at 26 sen with 843,500 shares traded, thus valuing the company at RM74 mil. – Aug 27, 2022
