King Wan

King Wan: Superb set of 1QFY14 results as net profit surged 81% y/y to $2.6m as revenue almost doubled to $25.1m (+94%). This was due to the overall increase in the value of mechanical & electrical (M&E) contracts available for recognition. However, gross margins slipped to 15.4% (-3.4 ppts) due to the completion of less contracts with better margins. King Wan's M&E order book remain healthy at $142.9m, providing the company with work till 2016. Net gearing remained at 0.18x. The $50.2m sale agreement of its Thai associates to KTIS is still underway, where King Wan will receive 5% in cash and the remaining 95% by way of shares in KTIS upon the successful listing on Thailand's Stock Exchange. The formal approval to list would likely be granted before 18 Aug and KTIS has up to 6 months to list the company. Going forward, the group is expecting construction gross margins to be affected by the competition and increase in labour and material costs.