MAIN Market listed Property developer Yong Tai Bhd has slipped into the red for its 2Q FY6/2022 ended June 30, 2022 mainly due to impairment losses booked during the quarter under review.
The group booked in an impairment loss of RM80.6 mil during the said quarter which resulted in a net loss of RM84.24 mil from a net profit of RM690,000 in the corresponding quarter a year ago.
Despite the loss, there are signs of recovery as Yong Tai posted a revenue jump of 251% to RM17.18 mil in its 2Q FY6/2022 from RM4.9 mil in the previous year.
The incurred impairment loss comprised that of hotel building amounting to RM73 mil recognised upon completion of the construction amid uncertainty on the tourism outlook as well as on other receivables of RM7.6 mil due to prolonged COVID-19 pandemic.
The challenging operating environment has also caused the Encore Melaka theatre to remain closed during the quarter under view, resulting in a loss of RM4.26 mil. However, this was mainly attributed to amortisation and depreciation which is a non-cash accounting expense.
Excluding the impairment, amortisation and depreciation, Yong Tai has started to show signs of recovery with positive revenue growth and operating cash flow.
“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 various restrictions imposed to contain the spread of infection,” commented Yong Tai’s CEO and executive director Datuk Wira Boo Kuang Loon.
“However, the group has taken various measures to mitigate the impact on our earnings and cash flow. We have also adapted to the new normal and have seen our operating cash flow return to positive despite the challenging operating environment.”
As its Encore Melaka theatre remains closed, Boo said Yong Tai has taken proactive measures to reduce its administrative expenditure before pouncing on a recovery as inter-state travel is now allowed while awaiting international border to be re-opened.
Boo further noted that the impairment done was timely as it would clean up Yong Tai’s book for the recovery ahead while putting the group in a good position to tap post-pandemic recovery.
“Following the impairment recognised to reflect the adverse impact of the COVID-19 pandemic, Yong Tai now has a combination of lean and quality assets that reflect its value,” he pointed out. “Despite that, the group’s net asset value remains higher than its market capitalisation.”
Among one the group’s key strategies to drive recovery is the completion and delivery of its existing property development projects which includes Amber Cove and Impression U-Thant. With a total unbilled revenue of RM280 mil as of end-December 2021, this will help to drive the group’s earnings improvement in FY2022.
Aside from that, the Encore Melaka theatre is targeted to re-open towards Yong Tai’s 4Q FY6/2022 with Malaysia eventually re-opening its borders.
“We are also looking at leasing our theatre for external events to generate additional income and diversify our income stream,” projected Boo. “With this strategy, it helps us to reduce our reliance on the Encore Melaka performance show.”
At the close of today’s trading, Yong Tai was unchanged at 13 sen with 9.74 million shares traded, thus valuing the company at RM179 mil. – Feb 25, 2022
