Second Chance

Second Chance: 4QFY12 results for period ending Jun. Note Second Chance will change its financial year end from 30 Jun 2011 to 31 August 2012. The current FY will comprise 14 mths from 01 Jul 2011 to 31 Aug 2012. 4Q12 revenue at $10.4m, -5.1% yoy, likely as apparel sales from the peak Ramadan season has not been captured. That is the main reason for the chg in financial year end. Operating profit however rose 3.5% yoy, on improved gross margins and lower admin costs. Net profit was $2.4m, -54% yoy, but mainly bcs of a lack of income tax credit of $2.2m in the previous yr. Pretax profit was $3.0m, +1% yoy. For FY12, EPS was 3.37cts, down from 8.03cts in FY11, mainly due to much lower fair valuation gain on properties (FY12 $2.6m vs FY11 $13.5m), and a higher share base arising from conversion of 53m warrants. Mgt notes that the main apparel business is expected to continue its good performance with higher revenue and profits from Msia stores, but cautions on slightly lower revenue from the Spore stores, as the weakening Ringgit will continue to affect its First Lady sales in Spore as it attracts more Malays to shop in Msia. Overall mgt believes the group should continue to perform well. Recall mgt previously guided for 3.3cts div vs 3.2cts last yr. The stock is down 3.9% at $0.37, likely on lower headline yoy net profit. The stock trades at 11x P/E, 1.1x P/B.