Stock Review – WTK(4243)(WTK HOLDING BERHAD) - 2

Bursa Malaysia - 4243
Bloomberg - WTKH:MK
Yahoo - 4243 .kl
Webpage - http://www.wtkholdings.com/

Annual Report 2016

From 2016 WTK annual report, WTK operates in five major segments as follows:

1) Timber – 79.16 % of revenue

2) Manufacture – 8.71% of revenue

3) Trading – 6.57% of revenue

4) Oil & Gas – 3.52% of revenue

5) Plantation – 1.52% of revenue

The adjusted earning per share on 2015 after the adjustment for non-recurring income (gain on disposal, foreign currency gain and etc) is 9.72 sen compared to 9.13 sen in 2014 (unadjusted). WTK cash and bank balances for 2015 has increase from RM 272,588,000 to RM 352,626,000. Besides that WTK had enough cash to cover all the loan and borrowing with the amount of RM 310,682,000 as reported in annual report 2015.

However WTK has RM 71,214,000 investment in an associate of which RM 53,465,000. The associate company is Alanya Marine Ventures Sdn Bhd which chartering and managing oil and gas exploration support vessels. Base on annual report 2015 the oil and gas sector making revenue of RM 25,545,000 which contributed to 3.52% of the company 2015 revenue. If the associated company can maintain its revenue WTK can get back the premium they paid for the company in about 2 years.

PROS:

è The adjusted EPS for 2015 is higher than the unadjusted EPS for 2014, 6.46% increase. è Cash and bank balance for 2015 has increase by 29.36%. è WTK had enough cash to settle all the loans and borrowing.

CONS:

è WTK has RM 53,465,000 of Goodwill from the purchase of 49% of the oil and gas associate.

Quarterly Report for First Quarter 2016

WTK quarterly report for period end 31 March 2016 show that its cash and bank balance increase to RM 423,949,000 from RM 352,626,000 as report in annual report 2015. However its loan and borrowing had increase to RM 334,349,000 from RM 310,682,000. The increase of cash is more than increase of loan and borrowing. The cash flow from operation is RM 55,602,000 which is about 61.79% of the cash flow from operation for the entire year 2015.

PROS:

è WTK cash increase by 20.23% in just three months. è The cash flow from operation for the three months in 2016 is about 61.79% of the cash flow from operation for the entire year 2015.

Family Tussle

The news from the Edge Malaysia regarding multiple lawsuits between the family member of the late founder of WTK. According to the news report there are 34 ongoing cases. The lawsuits  is about the share in the family private investment arm W T K Realty Sdn Bhd which owned 13.80% of WTK (base on 2015 annual report).

CONS:

è 34 ongoing lawsuits between the board of director.

Summary of Stock Reviews

Stock Review – KIMHIN(5371)-2 (KIM HIN INDUSTRY BERHAD)

Bursa Malaysia - 5371
Bloomberg - KHI:MK
Yahoo - 5371 .kl
Webpage - http://www.kimhin.com.my/

Annual Report 2015

From 2015 KIMHIN annual report, KIMHIN operates in four countries as follows:

1)  Malaysia – 68.48 % of revenue

2) China – 17.61% of revenue

3) Australia – 15.95% of revenue

4) Vietnam – 0.2% of revenue

KIMHIN earning per shares for 2015 is 24.50 sen compared to 17.03 sen reported in 2014. Besides that, KIMHIN had RM 12,058,000 classified as foreign transaction gain in the others comphensive income due to depreciation of Ringgit Malaysia against Australia Dollar and China Renminbi in 2015. In 2015, KIMHIN cash and cash equivalent had increase from RM 43,654,000 to RM 56,749,000 and the total debt had reduce from RM 10,173,000 to RM 9,208,000.

PROS:

è KIMHIN cash and cash equivalent had increase by 30%. è KIMHIN total debt had reduce by 9.49%

CONS:

è KIMHIN had RM 12,058,000 gain due to the depreciation of Ringgit Malaysia in 2015. Which is not sustainable because early 2016 Ringgit Malaysia had strengthen.

Quarterly Report for First Quarter 2016

As these report out on 26^th May 2016, KIMHIN stock price fall 10% on the next day. The main reason is these quarter KIMHIN had make a lost of 0.48 sen per share. These had scared some investor panic and start selling the shares at low price.

KINHIM had expenses of RM 8,339,000 stated as other expenses which is higher than KINHIM other expenses for the entire year of which are RM 7,280,000. Although the quarterly report did not state clearly what are the other expenses, in accounting other expenses included the operational and non - operational cost such as depreciation, discontinued operations expense , maintenance cost of fixed asset and ect.

On 17 December 2015, KIMHIN entered an SPA agreement to buy the ceramic tar manufacturing factories from Johan Ceramic. The factories had stopped operation hence I believe some of the cost required to expense during 1^st Quarter of 2016 to start back the operation of the factories which KIMHIN had reported as other expenses. If I am correct the other expenses will be one time payment and it does not affect KIMHIN future earning.

Besides that, the appreciation of Ringgit Malaysia on the first quarter of 2016 had decrease the earning of KIMHIN oversea operation when the convert the fuctional currency to presentational currency using temporal method. KIMHIN recorded comprehensive lost of RM 7,193,000 for these quarter due to currency exchange.

CONS:

è KIMHIN had report earning of -0.48 sen per share mainly due to other expense which it did not stated clearly. è The strengthening of Ringgit Malaysia in first quarter 2016 had decrease KIMHIN profit from its oversea subsidiary.

Summary of Stock Reviews