Second Chance

Second Chance: reports full year financial results for the 14 mths ended Aug ’12, vs 12 mths ended Jun ’11, as co had revised its year end. Note that the results would not be entirely comparable. Overall a positive set of results. Revenue at $64.6m, +32% yoy, driven by the apparel business ($29.6m, +49% yoy) and gold business ($20.8m, +17% yoy), on the account for two festive periods of Hari Raya during the current FY. As a results, operating profit jumped to $23.9m, +43% yoy. However, net profit at $30.5m, +1% yoy, as the group recorded lower fair value gains on properties ($10.5m vs $13.5m yoy), and incurred tax expense of $3.1m vs tax benefit of $0.8m the previous yr. The group has proposed a final dividend of 3.3cts (as per guidance) and special dividend of 0.5 cts (surprise), taking full yr div to 3.8cts (+19% yoy). This translates to a div yield of 8.7%, based on last close at $0.435. Mgt believes its focus on expanding the apparel business in Msia should lead to higher revenue and profitability. Expects to have 50 stores by end FYAug13, from the present 41 stores. In contrast in Singapore, the downsizing of “First Lady” store at City Plaza (space rented out) and the increasing number of its customers taking advantage of the weakening Ringgit and shopping in Malaysia is expected to result in lower revenue and profits for the apparel business. Mgt expects gold prices to be volatile, but sees it to be reasonably profitable in FY13. Adds, the sale of several properties amounting to $20.20 m will lead to about 5% lower rental income this year. However, the redeployment of the sale proceeds into bonds will partially offset the loss of rental income. Notes, higher contribution from dividend income can be expected in FY13 as compared to FY12. Barring unforeseen circumstances, the Group should continue to perform well. The stock last closed near its all time high at $0.435, which translates to 7.5x P/E, 1.2x P/B.