FJ Benjamin

FJ Benjamin: 2QFY14 net profit slipped 53% y/y to $0.5m, even as revenue grew 8% y/y to $104.6m, thanks to new store openings (Valextra, Superdry and Goyard) that are doing well. As with the previous quarter, this was largely due to forex losses. In addition, gross margins dipped to 38%, as the company engaged in marked-down pricing to clear inventory. Weaker consumer sentiment coupled with fewer Indonesian and Malaysian tourists visiting its Singapore outlets, also led to lower profitability y-o-y. Overall, the outlook remains challenging. FJB expects sentiment in its Indonesian and Malaysian markets to be relatively more stable, compared to the Singapore market. Its Indonesian market continued to record good growth during the quarter, as sales climbed 15% y-o-y and gross margins were maintained. FJB will continue its store expansion gradually by opening a new Tom Ford outlet in Apr ‘14 and a third Superdry outlet over the next few quarters. These new outlets would help contribute to revenue growth over the next few quarters. As a result of its brand expansion, FJB expects to incur a higher capex in FY14. OSK-DMG keeps its Neutral rating on the stock and trims TP to $0.23 (from $0.27)