King Wan Corporation

[GFG]

I've divested King Wan as well, due to the weak core earnings. All the recent ventures (bulk carrier, Skywoods, dorm, etc) do not seem to be doing well. Worryingly, the M&E biz, which for me is the most important piece of business, has suffered from labour costs increases. With the construction pie shrinking and increased competition, King Wan's CF may dry up, and their ability to pay dividend becoming dependent on selling of KTIS shares, whichever way it goes in the market. Equally concerning is the huge spike in director's compensation (the last quarter net profit was only SGD 750,645, but the directors paid themselves SGD 612,089. The quarter before it was an even more astounding SGD 2,961,880 bonus vs a core profit of only SGD 2,520,553.

Used to like the company for its strong core business, management's shrewd investments, and conservatism. Will be interested again when these qualities return.

All the best

Where'd you gotten the figures for director's remuneration every quarter? Director fees are paid yearly, so you probably mistook those figures for directors fees when they are not.

vested

[GPD]

I've divested King Wan as well, due to the weak core earnings. All the recent ventures (bulk carrier, Skywoods, dorm, etc) do not seem to be doing well. Worryingly, the M&E biz, which for me is the most important piece of business, has suffered from labour costs increases. With the construction pie shrinking and increased competition, King Wan's CF may dry up, and their ability to pay dividend becoming dependent on selling of KTIS shares, whichever way it goes in the market. Equally concerning is the huge spike in director's compensation (the last quarter net profit was only SGD 750,645, but the directors paid themselves SGD 612,089. The quarter before it was an even more astounding SGD 2,961,880 bonus vs a core profit of only SGD 2,520,553.

Used to like the company for its strong core business, management's shrewd investments, and conservatism. Will be interested again when these qualities return.

All the best

Where'd you gotten the figures for director's remuneration every quarter? Director fees are paid yearly, so you probably mistook those figures for directors fees when they are not.

vested

It is in their quarterly report.

[GFG]

I've divested King Wan as well, due to the weak core earnings. All the recent ventures (bulk carrier, Skywoods, dorm, etc) do not seem to be doing well. Worryingly, the M&E biz, which for me is the most important piece of business, has suffered from labour costs increases. With the construction pie shrinking and increased competition, King Wan's CF may dry up, and their ability to pay dividend becoming dependent on selling of KTIS shares, whichever way it goes in the market. Equally concerning is the huge spike in director's compensation (the last quarter net profit was only SGD 750,645, but the directors paid themselves SGD 612,089. The quarter before it was an even more astounding SGD 2,961,880 bonus vs a core profit of only SGD 2,520,553.

Used to like the company for its strong core business, management's shrewd investments, and conservatism. Will be interested again when these qualities return.

All the best

Where'd you gotten the figures for director's remuneration every quarter? Director fees are paid yearly, so you probably mistook those figures for directors fees when they are not.

vested

It is in their quarterly report.

I see. Thanks to both of you, for pointing this out.
"The quarter before it was an even more astounding SGD 2,961,880 bonus vs a core profit of only SGD 2,520,553."

The SGD 2,961,880 is not for the previous quarter before it but for the 6months period. (In other words it includes the SGD 612,089 for the current quarter)
Also, I think the huge jump in remuneration for the previous quarter includes a bonus for the KTIS divestment so it may not be fair to compare it against the core profit alone.
But yes, its good to monitor the remuneration in comparison to subsequent quarters (like the most recent one, which seems comparatively high)

[GFG]

OSK-DMG analyst: Lee Yue Jer, CFA

King Wan (KWAN SP) secured four mechanical and electrical projects in Singapore during Nov-14 to Dec-14 worth SGD43.3m.

The four projects are i) plumbing, sanitary and gas systems installation for Jewel Changi Airport, ii) sanitary, plumbing, gas, rainwater, wet/dry riser and fire hose reel systems installation for Woodland N1C 26 & 27, iii) sanitary, plumbing, gas, rainwater, dry riser and fire hose reel systems installation for Punggol West C40, and iv) aircon and mechanical ventilation system for a proposed Executive condo in Choa Chu Kang Grove.

During our Asean Corporate Day in Singapore, management highlighted its plans to realign their focus from residential buildings to commercial ones and with residential from HDB buildings to private apartments. We are positive about King Wan’s earnings growth outlook as it usually lags the construction industry, which witnessed robust growth two years ago.

King Wan’s ability to secure good long-term customers with a history of timely payments helps it to better manage its cash flows. Its strong orderbook into 2017 provides earnings visibility. We maintain BUY with a TP of SGD0.43 based on a 7% required yield.

[bear]

King Wan Corporation Third Quarter Financial Results released 13th Feb,2015.

http://infopub.sgx.com/Apps?A=COW_CorpAn...N6g2NJHKSo

[ethys]

Skywoods project sales up to October 2014 :
Unit launched : 420
Unit sold : 168 (40%)
Unit unsold : 252 (60%)

Sales are slowly picking up...
Skywoods project sales up to April 2015 :
Unit launched : 420
Unit sold : 245 (58%)
Unit unsold : 175 (42%)
They have been selling 15 units/month or more for the last 2 months. Too early to jump to conclusions but if this can be confirmed in the next few months then they should be able to finally sell everything by early next year. This will be reasonable as the TOP is for end of 2016.
Note that the average price is slightly down (from 1267 SGD/sq feet in Oct 2014 to 1183 SGD /sq feet in April 2015 but this is not very relevant since the surface of the units sold can explain these differences).
Anyway King Wan will probably release its full year results this Friday. Still hoping for a special dividend thanks to a very small sale of their KTIS shares. My pronostic is a 1.5c div + 0.5c spec div. Game one

[GPD]

Skywoods project sales up to October 2014 :
Unit launched : 420
Unit sold : 168 (40%)
Unit unsold : 252 (60%)

Sales are slowly picking up...
Skywoods project sales up to April 2015 :
Unit launched : 420
Unit sold : 245 (58%)
Unit unsold : 175 (42%)
They have been selling 15 units/month or more for the last 2 months. Too early to jump to conclusions but if this can be confirmed in the next few months then they should be able to finally sell everything by early next year. This will be reasonable as the TOP is for end of 2016.
Note that the average price is slightly down (from 1267 SGD/sq feet in Oct 2014 to 1183 SGD /sq feet in April 2015 but this is not very relevant since the surface of the units sold can explain these differences).
Anyway King Wan will probably release its full year results this Friday. Still hoping for a special dividend thanks to a very small sale of their KTIS shares. My pronostic is a 1.5c div + 0.5c spec div. Game one

I think their KTIS sale is not enough to give out 0.5cts so it will have to be topped up by their internal cash if they do declared a special div of 0.5cts.

They have paid out 0.7cts in Q2 which is pretty much all the cash from their ops + KTIS dividend in that two Qs.

To pay out 2cts div requires about $7mil. This will drain most of their cash.

Borrowing has been increasing as well.

Lastly, TA Corp did a $4.9mil impairment on their Dalian Shicheng Development which KWC has a stake in as well so I am guessing that KWC will do likewise. I have no idea what is their stake in that development.

I am not expecting their Q4 results to be pretty. 1 cts div will be more manageable. Let see if KWC can surprise me.

[ethys]

Skywoods project sales up to October 2014 :
Unit launched : 420
Unit sold : 168 (40%)
Unit unsold : 252 (60%)

Sales are slowly picking up...
Skywoods project sales up to April 2015 :
Unit launched : 420
Unit sold : 245 (58%)
Unit unsold : 175 (42%)
They have been selling 15 units/month or more for the last 2 months. Too early to jump to conclusions but if this can be confirmed in the next few months then they should be able to finally sell everything by early next year. This will be reasonable as the TOP is for end of 2016.
Note that the average price is slightly down (from 1267 SGD/sq feet in Oct 2014 to 1183 SGD /sq feet in April 2015 but this is not very relevant since the surface of the units sold can explain these differences).
Anyway King Wan will probably release its full year results this Friday. Still hoping for a special dividend thanks to a very small sale of their KTIS shares. My pronostic is a 1.5c div + 0.5c spec div. Game one

I think their KTIS sale is not enough to give out 0.5cts so it will have to be topped up by their internal cash if they do declared a special div of 0.5cts.

They have paid out 0.7cts in Q2 which is pretty much all the cash from their ops + KTIS dividend in that two Qs.

To pay out 2cts div requires about $7mil. This will drain most of their cash.

Borrowing has been increasing as well.

Lastly, TA Corp did a $4.9mil impairment on their Dalian Shicheng Development which KWC has a stake in as well so I am guessing that KWC will do likewise. I have no idea what is their stake in that development.

I am not expecting their Q4 results to be pretty. 1 cts div will be more manageable. Let see if KWC can surprise me.

Nice one GPD. I didn't notice that TA corp posted a 4.8M SGD impairment on their investments in Dalian. So I checked and it turns out that King Wan has a 36.6% share in Dalian which is actually even more than TA corp share in Dalian (26%) ...
The good news is that King Wan has already recorded around S$9m-10m of impairment from Dalian since FY10 so hopefully not much more to come tho they keep lending them money year after year. Definitely something to monitor in their full year results especially in Note 8 Advances to associates. Really hoping that they did not increase their exposure to Dalian...
Still hoping for at least 1.5c div (same than last year) as this should not impact their CFs (unless they increased their loans to Dalian). The proceeds from KTIS dividends could allow for an extra 0.5c div but not sure if that was not already reflected in last December 0.7c div. So unless they sold some KTIS shares special dividend is not likely.

In term of EPS this coming quarter will be widely impacted (negatively) by the decrease of KTIS share price since this investment is recorded as Investment for Sale in King Wan balance sheet so each quarter they have to adjust the value in their balance sheet to fair market value and record any change as profit or loss in the income statement.
But unlike Dalian at least there is no surprise with this as it is completely transparent and already reflected in the share price.

[desmondxyz]

Kingwan has not been very successful in their property investments, both china and sg. Unless they cash in for KTIS shares (which I doubt so given the conservative management), I don't see much positive side on their earnings for the next few quarters.....

(Divested but still monitoring)

[GPD]

TA just issued a profit loss guidance. I am not sure if this is due to their core ops or due to yet another Dalian ShiCheng write-off but TA results does provide some insight to KWC's results.