Stock Review – WTK(4243) - Klse Value

Author: Tan KW   |   Publish date: Sun, 14 Feb 2016, 10:08 PM 

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Saturday, 13 February 2016

 

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

Key Value Investor Criteria: -

 

Description	Value	Criteria	Point
Price to Tangible Book Ratio	0.52*	< 1	5/5
Return on Asset	1.36*	> 0	3/5
Return on Common Equity	3.11*	> 0	3/5
Quick Ratio	1.61*	>1	3/5
Long term Debt / Total Capital	25.13*	<50%	3/5
Continue Dividend over Past 10 Years / Since Inception	Yes	Yes	1/1
Historical Dividend Yield	2.1%	>3%	0/2
Cash From Operation	Positive > 5 years	Positive	5/5
P/E	18.25	10	0/2
Total Point			23/35

Note:

 *            Data obtain from Bursa Marketplace on 14/2/2016

 

Company Profile

 

WTK had four major business segments as follows:

1)   Timber (80.92% of 2014 revenue)

2)   Manufacturing and trading (17.96% 0f 2014 revenue)

3)   Plantation (0.56% of 2014 revenue)

4)   Offshore Support Vessel (new business)

 

1) Timber

 

This division extract and sale timber, manufacture and sale plywood, veneer and sawn timber. This division have log pond, sawmill in Sarawak. This division start in 2007 and contributed the most revenue to the company in 2014. The top three country which this division export round logs to are India (73%), China (15%), Vietnam (8%). While the major plywood products were Japan (81%), Taiwan (18%).

 

PROS:

WTK export most their timber product the depreciation of Ringgit Malaysia might benefit the company.

CONS:

WTK export most of the plywood product to Japan. The economy slowdown in Japan might affect the sale of plywood to Japan.

2) Manufacturing and trading

 

This division manufacturing and trading of aluminium foil. This division just upgraded to comply with FSSC 22000 quality certification for food product packaging this might attract more customers to do business with WTK. The lower on demand for foil and flexible packaging will affect the revenue of the company.

PROS:

WTK is now complied with FSSC 22000 quality certification

CONS:

Lower demand in foil and flexible packaging

3) Plantation

 

WTK had 11,800 hectares of oil palm plantation but only 1,300 hectares are matured in 2014 annual report. Due to the low FFB and palm oil price these division is making loss in 2014 and up to 3^rd quarter of 2015.

 

PROS:

WTK have large palm oil plantation which is not mature yet once mature these will increase the revenue of these division.

CONS:

Lower oil price will decrease the demand of oil palm as alternative fuel hence these will decrease the price of oil palm.

4) Offsore Support Vessel

This is a new business for WTK which operating in 2014. From the 3^rd Quarter 2015 financial report. This investment has contributed profit to the company.

CONS:

Lower oil price will affect the customer of this division mainly on Oil and Gas (Petronas).

 

Financial Statement

 

From the annual report 2014, WTK had increase the investment in associate from RM 0 to RM 70,377,000. Of the RM 70,377,000, RM 53,465,000 is Goodwill. In the 2014 report there is an increase in other investment from RM 1,312,000 to RM 12,752,000. This is mainly because there is an increase in investment in preference share.

 

Base on 3^rd Quarter 2015 report, current borrowing for WTK is RM 203,259,000 however WTK had enough cash reserve to cover these borrowing and loan.

 

PROS:

WTK had enough cash reserve to cover the current borrowing and loan.

CONS:

RM 70,377,000 investment in associate of which Rm 53,465,000 is goodwill.

 

Director and Shareholder

 

WTK is a family business run by the Wong family who lead by Pemanca Datuk Wong Kie Yik. Pemanca is a title given by the State Government of Sarawak as a leader just below the Temenggung. He is actively involves in the Malaysia Timber Industry and Chairman of Sarawak Timber Industry.

 

PROS:

Pemanca Datuk Wong Kie Yik, chairman of WTK is actively involves in the timber industry in Malaysia where the most of revenues of WTK come from.

 

Conclusion

 

After the review on WTK, WTK is currently undervalue base on the assets they have in 2014 report. Although P/E of WTK is high 18.25 on reporting time, there is still future earning from the plantation division once more palm oil tree is mature and from the offsore support vessel operation. I believe the Wong family is going to helm this company out from the bad times and improve the earning. Hence I will recommend BUY to these company.

 

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