Yong Tai eyes recovery in FY2023 following completion of FY2022 kitchen-sinking impairment

Main Market listed Property developer Yong Tai Berhad (“YTB” or “Group” or “Company”) has recorded a net loss of RM135.3 million in the fourth quarter of its financial year ended 30 June 2022 (“4QFY2022”) as compared to a net loss of RM9.8 million in the previous year’s corresponding quarter. 

Image above: YTB’s Chief Executive Officer and Executive Director, Datuk Wira Boo Kuang Loon

This was mainly due to the recognition of impairment loss on hotel building, intangible assets, inventories and other receivables totalling RM113.1 million during the quarter. Aside from that, the property development segment also posted a weaker financial performance due to escalating costs as a result of COVID-19-led supply chain disruptions, shortage of foreign labour and the rising cost of building materials. 

However, there were signs of recovery, as seen by the increase of 47.5% in its revenue to RM46.2 million during the quarter. 

YTB’s Chief Executive Officer and Executive Director, Datuk Wira Boo Kuang Loon, said, “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 the restrictions imposed to contain the spread of infection.”

Aside from the kitchen-sinking exercise, Datuk Wira Boo also shared that the Group has taken various measures to mitigate the impact on the Group’s earnings and cash flow. In fact, YTB has managed to return to a positive operating cash flow of RM45.4 million in FY2022 compared to a negative cash flow in the previous year.

Datuk Wira Boo is of the view that the impairment done was timely as it would clean up YTB’s book with a combination of lean and quality assets for the recovery ahead while putting the Group in a good position to tap on the post-pandemic recovery.

During the financial year, YTB has also completed its share consolidation exercise, with a total of 1.43 billion shares consolidated into 285.5 million. This will help to enhance the Group’s profile among investors as it increases the reference price per YTB share. It will also potentially reduce the volatility of the trading price for YTB shares, encouraging investors to focus on long-term investment prospects. 

Going forward, Datuk Wira Boo shared that YTB’s strategy is to focus on the completion of its ongoing property development projects, such as Amber Cove and Impression U-Thant. 

“Amber Cove and Impression U-Thant are on track to be completed and deliver the vacant possession by the fourth quarter of this year and the first quarter of 2023, respectively. Upon completion of Amber Cove, the estimated billings and collection of RM50 million will further improve the Group’s operating cash flow. With total unbilled revenue of RM206 million as of 30 June 2022, the property development segment will provide earnings visibility to the Group over the next two financial years,” Datuk Wira Boo said. 

Aside from that, the Group has also shifted its strategy for the Encore Melaka theatre in response to the pandemic. Encore Melaka will serve as a one-stop solution for all event staging needs and even cater for outdoor activities, marketing and ticketing sales. The shift in strategy from the previously focused Impression Series will benefit from reopening the international borders and easing the travelling process into Malaysia. 

As for the Courtyard by Marriott Melaka is targeted to commence hotel operation by the end of October 2022. YTB is optimistic that this new hotel operation will generate an additional revenue stream for the Group with the festive year-end season approaching and the high tourist arrival rate.  

Meanwhile, for the vaccine distribution venture, YTB has completed the Phase III clinical trials for the COVID-19 vaccine in Malaysia. Meanwhile, its strategic partner, Shenzhen Kangtai Biological Products Co., Ltd (“SZKT”) is in the midst of conducting data analysis for its multinational clinical trial. In the meantime, the Group is exploring the distribution of other healthcare products and vaccines to generate diversified revenue streams for the Group.  

As for the gold mining operation, the Group will not proceed with the venture due to the unsatisfactory indicative results from the gold exploration works. 

“Overall, we expect the business environment to remain challenging in FY2023 amidst the uncertainty in the global economic recovery. Nonetheless, we will continue to scout for strategic locations that fit into the long-term plans for our property development business. In addition, we will explore new property development projects via the acquisition of lands or joint ventures with landowners. Aside from that, the Group will continue to look for any other business opportunities to diversify our income stream and strengthen our competitive edge,” Datuk Wira Boo said.

This content is provided by Aegis Communication Sdn Bhd.

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