Wing Tai’s apparels business to expand presence in East Malaysia

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KUCHING: Wing Tai Malaysia Bhd (Wing Tai) could expand its apparel retailing and garment manufacturing business into major towns in East Malaysia in the future to enhance the group’s bottomline.

RHB Research Institute Sdn Bhd (RHB Research) in a report yesterday said the company is looking for opportunities to expand into major towns in East Malaysia to boost its financial performance.

This was on the back of Wing Tai’s apparel business experiencing eroding margins due to intense competition, thus seeking opportunities in other markets to raise its profit margins.

“As part of its strategy to increase its brand awareness in the market, the company is also planning to add another 14 outlets in financial year 2014 in major malls in the Klang Valley while strengthening its foothold in Penang,” it observed.

To note, Wing Tai carries 11 fashioin brands in Malaysia namely Topshop, Topman, Dorothy Perkins, Warehouse, Pumpkin Patch, Wallis, Karen Millen, BCBG Maxazria, Diva, Miss Selfridge and Ben Sherman.

There is currently one Dorothy Perkins outlet in Kuching.

On another note, RHB Research observed Wing Tai’s property projects in Penang will serve as its next growth catalyst.

The research firm noted that with the opening of the Penang Second Bridge, this should spurred higher demand for property and expects Wing Tai’s property projects in Penang to receive encouraging take-up rate.

RHB Research is hopeful that the company could achieve higher sales in the second half of 2014.

Meanwhile, Wing Tai in a filing to Bursa Malaysia on April 22 said its net profit for the nine months of financial year 2014 (9MFY14) dropped 50 per cent year-on-year (y-o-y) to RM41 million.

The company said its turnover for 9MFY14 also declined 33 per cent y-o-y to RM288 million.

RHB Research said the lower revenue was a result of lower contribution from Wing Tai’s property development division upon the completion of the Verticas Residensi project in the previous financial year.

At the same time, the research firm noted that its apparel business sales was flat, increased two per cent y-o-y to RM146.4 million.

For the third quarter of financial year 2014 (3QFY14), the company’s earnings also fell 49 per cent y-o-y to RM14.6 million while turnover dipped 33 per cent y-o-y to RM113.5 million.

Likewise, on a quarterly basis, RHB Research said Wing Tai’s total revenue improved by 23 per cent to RM113.5 million due to higher contribution from its property development segment while its net profit increased 41 per cent quarter-on-quarter to RM14.6 million.

The research firm observed that the improvement for Wing Tai’s net profit was due to higher profit recognition from the company’s Verticas Residensi project in which the company had some unsold units upon completion.