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Net Profit Up 15% at Second Chance

second chance logo Second Chance Properties Limited (SGX: 528) posted a slight total revenue decline of 2% in the first quarter of 2014 (1Q 2014). The results were released after market close yesterday.

Second Chance’s humble beginnings date back to 1975 when it was first engaged in the tailoring of men’s garment. Today, the company has four business divisions – Apparel, Gold, Properties and Securities.

For 1Q 2014, the total revenue was at $9.2 million while that in 1Q 2013 was at $9.4 million. The table below shows the breakdown of the revenue of the different divisions, in both 1Q 2014 and the previous year:

Revenue (S$’ mil) 1Q 2014 1Q 2013 % change
Apparel

2.69

2.77

-2.9

Gold

2.98

3.37

-11.6

Properties

2.40

2.53

-5.1

Securities

1.13

0.72

56.9

Source: Second Chance 1Q 2014 Results

Out of the Apparel division’s $2.69 million in revenue, $2.32 million or 86.2% was due to the contributions from the Malaysian apparel business.

As for the dip in revenue for the Gold division, the firm said “there was no noticeable event that contributed to this decrease”.

The revenue decrease for the Properties segment was due to the loss of rental income on sale of three properties and the revenue decrease for the Securities segment was largely due “to the coupon payments received on the fixed income securities and higher dividends received on some equity securities”.

For 1Q 2014, the net profit before income tax was $3.8 million while that in the previous year was $3.7 million, an increase of 2.4%. The net profit grew 15% to $3.9 million in 1Q 2014. The net profit breakdown is shown below:

Net Profit (S$’ mil) 1Q 2014 1Q 2013 % change
Apparel

0.02

0.14

-85.7

Gold

0.21

0.71

-70.4

Properties

2.11

2.04

3.4

Securities

1.76

1.11

58.6

   Source: Second Chance 1Q 2014 Results

The decline in net profit from the Apparel segment was due to “increased expenses on new shops opened in Malaysia” and the net profit decline for the Gold segment was attributed to a “decrease in revenue and also drop in retail sale price of gold in FP 2014 [1Q 2014] which resulted in a lower gross profit margin and hence lower profits”.

The increase in net profit for the Properties segment was because of “revaluation gain on properties held for sale as at 30 November 2013” and the net profit increase for the Securities division was due to “the coupon payments received on fixed income securities and higher dividend received on some equity securities”.

As of the end of November 2013, the total debt stood at $44.4 million, with the gearing ratio at 0.16.

In 1Q 2014, the firm used $44,000 in net cash for operating activities while in 1Q 2013, $1.05 million was generated from operating activities.

The firm said that barring unforeseen circumstances, it will continue to be in the black.

The shares last traded at $0.44 yesterday, translating to a PE ratio of around 5. The dividend yield is approximately 7%.

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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.