Weida: Disappointing FY14Q2

Weida FY14Q2 Financial Result

WEIDA	FY14Q2	FY14Q1	FY13Q4	FY13Q3	FY13Q2	FY13Q1
Revenue	71.3	88.0	96.9	98.6	111.0	72.3
PBT	1.9	14.0	3.3	13.7	9.2	3.1
PBT%	2.7	15.9	3.4	13.9	8.3	4.3
PAT	0.3	9.9	55.0	8.9	6.2	1.7
Manu Rev	38.2	54.2	42.5	53.9	56.2	42.3
Manu Profit	5.7	7.1	2.8	10.2	4.8	5.3
Work Rev	27.6	28.8	58.3	39.3	44.8	29.3
Work Profit	0.2	6.7	3.8	4.8	2.8	2.4
Service Rev	5.5	5.0	4.7	5.5	9.4	8.3
Service Profit	-0.2	0.5	-0.2	0.2	0.5	0.7
Prop Rev	0.0
Prop Profit	-3.5
Total Equity	348.5	353.3	347.6	216.7	207.7	205.2
Total Assets	632.0	652.4	603.3	576.4	546.4	580.4
T/Receivables	100.2	120.5	149.3	183.8	144.4	153.0
Inventories	53.1	46.5	46.2	42.8	42.3	46.2
Cash	229.4	259.0	263.5	63.1	65.9	87.9
P/ Dev Cost	4.0
Total Liab	272.7	285.3	242.1	329.7	310.9	347.6
T/Payables	97.8	101.7	95.6	102.7	98.8	102.7
ST Borrow	79.4	67.6	59.1	73.5	70.4	96.5
LT Borrow	79.4	105.0	76.0	85.0	119.7	131.6
Net CF	-63.4	-34.1	209.2	11.1	13.2	35.3
Operation	-22.8	-5.3	97.3	15.5	33.3	11.1
Investment	1.7	-0.6	133.5	-7.1	-9.9	-4.9
Financing	-42.3	-28.2	-21.6	2.8	-10.1	29.2
EPS	0.27	7.81	43.53	7.03	4.92	1.79
NAS	2.75	2.78	2.74	1.71	1.64	1.62

After posting an impressive FY14Q1 result 3 months ago, Weida's current FY14Q2 result is terrible. Its revenue drops 19% QoQ from RM88.0mil to RM71.3mil, while net profit drops 97% from RM9.9mil to just RM0.3mil.

Weida's manufacturing segment suffers significant drop in revenue and profit due to lower demand in this quarter. While the revenue from work segment remain flat, its PBT drops substantially due to one-off construction cost in this quarter and lower contribution from telecommunication towers. Its service segment suffers minor loss due to disposal loss of RM0.8mil in the quarter. 

Weida's property segment has just taken off with its maiden project Urbana Residences (GDV RM231mil) launched in early Oct. It may start to contribute to the group's profit next quarter. I estimate this project may give an average of RM10-12mil net profit every year to Weida for the next 3 years.

       Urbana Residences

Overall this quarter's results is disappointing, especially its core manufacturing segment. If the growth in manufacturing does not increase or sustain, then investing in Weida will be less exciting although it has just ventured into property and has good prospect in telecommunication tower business in Sabah.

Many people overlook Weida as a potential beneficiary in the RM1.5bil telecommunication towers projects in East Malaysia announced in Budget 2014, as Weida has a strong presence in Sabah.

I will keep Weida in my stock watch list, but most probably will not put money in it until subsequent quarter's results, as history suggests that its revenue & profits tend to fluctuate a lot.