Monday, August 25, 2014
FJ Benjamin: FY14 saw core net loss of $20.8m, relative to core net profit of $1.6m last year, while revenue slid 1% to $368.2m, on the back of slowing luxury spending in North Asia, coupled by a sharp fall in tourist spending in Singapore from Indonesian and China tourists. Gross margins fell from 4ppt to 39%, as margins were pressured by increased costs in Singapore, further pressured by deep discounting among SE Asian retailers. Bottom line was further weighed by non-cash provisions of $5.1m and unrealized translation loss of $2.1m booked by the Indonesian associate. FJ Benjamin, which distributes luxury and premium mass market brands, does not expect meaningful recovery in consumer spending sentiment in Singapore, Malaysia and North Asia in the near to medium term. To offset a persistent gloomy outlook, it expects to close/ down-size stores and reduce inventory and costs to improve productivity. Meanwhile, management recaps the Indonesian alliance with Saratoga, in which there will be a 25% investment in the group’s Indonesian business. FJ Benjamin is expecting a gain of $11.5m from the transaction, and guides that the alliance will help the Indonesian business grow faster. FJ Benjamin is trading at 1.05x FY14 P/B, while P/E is unmeaningful as it is unprofitable.