Popular Holdings

Popular Holdings: Popular's FY14 net profit dived 54.5% to $10.6m, despite achieving higher revenue of $551.9m (+5.3%). The revenue breakdown is as follows: 1) Property: Revenue increased 22% to $18.2m, with six property units were sold during the year versus one in FY13. 2) Retail & Distribution: Revenue grew 1.4% to $469.5m, largely contributed by new retail outlets, BookFest@Malaysia, Gadgets & Write Fair in Singapore and BookFest@Singapore. 3) Publishing & e-Learning Division: Revenue increased 10.5% to $64.1m, primarily driven by growth in adoption of new textbook series and increase in revenues from new publication of assessment / supplementary titles in Hong Kong, as well as increase in adoption of the group’s teaching aids and teacher’s training programme in China. Gross margin (excluding property) maintained at 18.1%, despite rising rental costs and manpower shortages across the region. Bottom-line was however weighed by a 13% rise in admin, distribution and selling expenses to $78.0m, due largely to higher manpower and rentals expenses, and costs incurred for higher advertising and promotion expenditure. Other operating expenses doubled to $8.0m, due to losses recognised by the group’s property division, which saw an impairment loss for two units at 18 Shelford, and provisions for foreseeable losses on development properties recognised on Permai Residences. Going forward, management remains cautious of the unexpected economic upheavals and the continuing regulations of the property sector, highlighting that inflationary cost pressure on manpower and rental may not ease in the immediate term. Popular declared an unchanged final dividend of 1¢. At the current price, Popular trades at 20.4x FY14 P/E.