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Singapore’s Big Loser for the Week

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Courts Asia Ltd (SGX: RE2) has fallen by 4.8% since last Friday to close at S$0.495 on Thursday. With the Straits Times Index (SGX: ^STI) inching up by 0.2% to 3,295 points in the same time, Courts Asia has certainly been a big loser for the week.

A leading retailer of furniture, IT gadgets, and household electronics in Southeast Asia, Courts Asia operates more than 70 stores across Singapore and Malaysia, covering over 1 million square feet of retail space. The company has moved into Indonesia and will operate the country’s first Big-Box Megastore by September this year. Even though the firm was listed in October 2012, it had already been in business in Singapore and Malaysia since 1974 and 1987 respectively.

Courts Asia had released its first quarter results on Wednesday evening. Revenue came in at S$194.1 million, a slight decrease of 1.5% from the previous year. Sales from Singapore, which made up around 66% of ttotal revenue, tumbled by 5.9% as the company cut back on its participation in tradeshows in order to focus on higher margin activities. The slowdown in bulk sales of digital products also contributed to the decline in revenue in Singapore.

Despite a slight dip in revenue, Courts Asia’s  net profit had declined by 27.9% to S$5.1 million. This was due mainly to higher costs with regards to distribution, marketingand staffing. Lower taxes and higher other income helped to mitigate the situation to a small extent.

Going forward, the company wants to have three stores up and running in Indonesia by 2015. Courts Asia’s Executive Director and Group Chief Executive Officer Mr. Terence Donald O’Connor said that in the mid to long term, the firm is positive on the growth story of Asia which has a burgeoning middle class with increasing disposable income.

Courts Asia is trading at a historical PE ratio of close to 10.

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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.