Chasen

Chasen: 2QFY14 net profit slumped 53% y/y to $0.4m although topline improved 24% to $26m on the back of higher expenses and lower other operating income. The increase in revenue came from the Relocation Business Segment, which soared 42% to $8.8m, due to projects in PRC, Malaysia and Vietnam. Revenue from Technical and Engineering Business also grew 18%, while Third Party Logistics contributed 15% of revenue. Operating expenses were mainly driven by 34% increase in distribution and selling expenses from marketing expenses payable for projects in China, 8% increase in administrative expenses from new operations in Timor Leste and Jilin, and 17% increase in finance cost due to higher interest paid for bank loan and finance lease. Chasen expects to be profitable this year as the group continues to secure projects in its Specialist Relocation business in line with improving global economy while Technical and Engineering business had also saw contracts secured. These projects will be executed over this and next financial year. Investments in Timor Leste and Jilin, PRC should begin contributing revenue in the following 2 quarters. Management emphasized that they managed to secure 14 contracts worth $35.5m for 1HFY14, and expects momentum to continue. Net asset value at end September was 20.8¢, translating into 0.87x P/B. Annualized 1HFY14 P/E is 31x.