Better quarter for WTK from timber, plantations

KUALA LUMPUR: Higher contributions from timber and plantation boosted WTK Holdings Bhd’s (WTK) figures for the third quarter of financial year 2018 (3QFY18), whereby the firm saw 3Q18 revenue of RM213.2 million which was up 3.1 per cent quarter on quarter (q-o-q).

Researchers with Affin Hwang Investment Bank Bhd (AffinHwang Capital) saw that WTK’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved to 8.6 per cent in 3Q18 mainly due to margin improvement in itstimber division.

To note, WTK’s core net profit more than doubled q-o-q to RM2.9 million.

“WTK’s revenue for the first nine months of 2018 (9M18) increased by 6.2 per cent year on year (y-o-y) to RM603.2 million, mainly due to higher contribution from its timber (attributable to an increase in log sales volume) and plantation (attributable to higher CPO sales volume) divisions,” AffinHwang Capital said in a note yesterday.

“However, this was partially offset by lower contribution from its manufacturing and trading divisions (attributable to lower export sales due to weakening demand for masking tapes).”

Revenue of the timber and plantation divisions increased by 1.9 and 81.7 per cents yo-y respectively to RM487.1 milllion and RM62.6 million, while revenue of WTK’s manufacturing and trading divisions were down by 0.7 and 5.3 per cent y-o-y, respectively, to RM30.5 million and RM21.6 million.

“WTK’s 9M18 PBT surged by more than 100 per cent on an annual comparison to RM73.1 million, mainly due to the gain on deconsolidation of its subsidiary.

“After excluding one-off items, WTK recorded a core net loss of RM15.3 million for the first nine months of 2018 (9M18), narrowing from a core net loss of RM26.1 million in 9M17 and above our earlier expectation for a RM32 million core net loss in 2018.

“The variance to our forecast was partly attributable to betterthen-expected contribution from its timber division. Given the stronger 9M18 results, we narrow our 2018E core net loss to RM13 million from RM32 million previously.”