Financial Analysis of King Wan Corporation Limited: Net Profit Decline Details

Business Description

King Wan Corporation Limited is a Singapore-based company primarily engaged in investment holding. The Group’s core business operations include providing mechanical and electrical engineering services, rental of mobile lavatories and other facilities, and other investments. The company operates mainly in Singapore, as detailed in the financial report for the half-year ended 30 September 2023 [[1]].

Industry Position

The company operates within the mechanical and electrical engineering sector in Singapore. Specific competitors and market share details are not provided in the report. However, its revenue streams from construction contracts and service rendering suggest a foothold in these markets [[10]].

Revenue Streams and Customer Base

The Group’s revenue primarily arises from construction contracts and the rental of portable lavatories, indicating a diverse customer base within the construction and service industries. The report highlights an increase in revenue by SGD 11.6 million to SGD 75.8 million, attributed mainly to increased construction activities [[20]].

Financial Statements Analysis

Income Statement

For the half-year ended 30 September 2023, King Wan Corporation reported a gross profit margin of 19.4%, up from 12.3% in the previous year, mostly due to improved post-pandemic project margins [[20]]. However, the net profit after tax decreased to SGD 5.7 million, down from SGD 6.3 million, affected by various factors including a decrease in other operating income and increased loss allowances [[20]].

Balance Sheet

The Group’s equity base increased to SGD 84.3 million as of 30 September 2023, up from SGD 81.3 million as of 31 March 2023. The balance sheet reflects a decrease in current liabilities and stable non-current assets [[21]].

Cash Flow Statement

Net cash used in operating activities amounted to SGD 4.9 million, compared to SGD 3.5 million in the previous half-year. This increase in outflow is primarily due to changes in working capital and construction activities [[21]].

Dividend and Special Activities

No dividend has been declared for the current financial period to preserve working capital [[15]]. The company is focused on maintaining sufficient liquidity to meet obligations, with no special activities mentioned to improve profitability [[22]].

Key Findings and Recommendations

Strengths

• Increased revenue due to heightened construction activities.
• Improved gross profit margins post-pandemic.

Risks

• Decreased net profit despite increased revenue.
• No dividend declared, suggesting cautious liquidity management.

Investment Recommendations

If you currently hold shares in King Wan Corporation, consider monitoring the company’s financial health given the current profit decline and absence of dividend payouts. For potential investors, exercise caution and await further signs of financial recovery or strategic initiatives by the company.

Disclaimer: This recommendation is based solely on the information provided in the financial report and should not be considered as investment advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.

View King Wan Historical chart here