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Courts Asia Furnishes Higher Earnings

courts logo Revenue rose 1.6% for Courts Asia Limited (SGX: RE2) to $197 million for 1st quarter of 2013 (Q1 2013) over 1Q 2012. The net profit was up 5.1% to $7.0 million over the same period.

Singapore’s sales contributed to 69% of the total sales. Like-for-like sales excluding export sales increased by 7.6%. The highest growth was reported in Courts Megastore Tampines and Toa Payoh branches as a result of store relaunches in December 2012 and March 2013 respectively.

Malaysia’s sales contributed 31% of the Group’s sales. Like-for-like sales went down by 4.2%, which was attributed to adverse impact of the haze. This was mitigated by a “higher service charge income which resulted from a higher credit yield and sales contribution from new stores.”

Gross profit margin was marginally higher at 30.6% for 1Q 2013 versus 30.1% for 1Q 2012. This was mainly due to a higher service charge income and shift in the sales mix towards electrical and furniture categories, which carry a higher gross profit margin.

The total borrowings as of 30 June 2013 was at $329.3 million and this consists of “the amount received from the issue of fixed rate notes, the Asset Securitisation Programme 2012 in Singapore and Syndicated Senior Loan in Malaysia.” This represents a gearing of 0.49x. It has a cash position of $184.2 million.

The net cash flow from operations for 1Q 2013 was at negative $1.6 million. For 1Q 2012, it was at a negative $13.9 million.

Courts Asia’s Executive Director and Group Chief Executive Officer (CEO), Mr Terence Donald O’Connor, said, “We are pleased to have attained an improvement in net profit despite a more challenging macro environment in Malaysia and higher interest expenses of S$960,000 from our MTN issue. At the same time, we continue to focus on executing our expansion plans, which are progressing ahead of our expectation.”

Courts Asia opened their first ‘Big-Box’ Megastore in Sri Damansara, Malaysia and secured their second ‘Big-Box’ site in Subang Jaya as well as two other sites in Sabah within a short period of time. This will increase the store retail footprint in Malaysia by 17%. Courts Asia plans to open six smaller format stores by March 2014.

In the Indonesia front, there will be development of the first two ‘Big Box’ Megastore outlets in the country with long term lease. The company remains on track to open their first Indonesian store in a ‘Big Box’ format in Bekasi, eastern Jakarta, by 2014.

No dividends were declared. The shares opened at $0.90 on 13th August 2013, a day after results release.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.