Timber anyone?

May 2017 –  Three  Malaysian-listed companies reported a more than 10% deviation in their financial results, with WTK Holdings Bhd and Seacera Group Bhd recording added profits, and HCK Capital Group Bhd lower earnings.

Malaysian timber player, WTK Holdings announced that there was a deviation of more than 10% between its audited and unaudited net profits for Q4’2016 ended Dec 31, 2017, mainly attributable to over recognition of net loss of an associate. The group had earlier reported a share of loss of associates of RM21.21 million, higher than the audited share of loss of RM21.07 million, mainly adjusted for realised gain on foreign exchange on settlement of vessel charter rental denominated in US dollars

Current Financials & Prospects

WTK has been achieving consistent profitability until this recent quarter:

WTK_Financials.png

This was primarily due to declining results in its Oil & Gas division:

Results_Review.png

Nevertheless, Management are cautiously optimistic about the Company’s future in the coming months:

WTK_Prospects.png

Industry Issues

Shrinking log production has hurt the bottomline of most Sarawak-based timber companies. Their production may be further curtailed going forward due to the requirement to comply with strict rules related to timber/forest certification and sustainable forest management.

Read more at http://www.thestar.com.my/business/business-news/2016/09/13/lower-log-output-a-concern/#VXmAjqCusWODPYaj.99

Internal Issues – Family Feud

The long-drawn-out legal tussle began a few weeks after the death of Kie Nai on March 11, 2013. At the time, Kie Nai was the single largest shareholder in WTK Realty with 8.17 million shares or a 49.8% stake. Together with 800,000 shares representing a 4.88% stake in Hou-Lianq’s name, Kie Nai’s family commanded 54.68% of WTK Realty’s voting rights.

However, Kie Yik and Kie Chie, each holding 22.66% of WTK Realty’s voting rights, contended that of the 8.17 million shares, 5.25 million shares were fraudulently obtained by Kie Nai.

Source: http://www.theedgemarkets.com/article/family-feud-rocks-sarawaks-wtk

Opportunistic Trade

Personally, may consider an opportunistic entry trade at support level of MYR0.86 (hoping for a “failure test”) with a possible target price of RM1.45 and stop-loss of around MYR0.68.

  • Return: MYR0.59
  • Risk (1R): MYR0.18
  • Return-to-risk ratio: 3.28x 

WTK_FA.png

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES

Author: Ken Utau

Markets Observer + Food Lover

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