Singapore’s Big Loser of the Week: Aspial Corporation

Shares of Aspial Corporation (SGX: A30) have slipped by 5% in price since last Friday to end the week at S$0.37. In comparison, Singapore’s market barometer the Straits Times Index (SGX: ^STI) had gained 0.3% and this makes Aspial one of Singapore’s big losers for the week.

The company’s a jewellery retailer, property developer, and financial services provider all rolled into one. Singapore’s first public-listed pawnbroker Maxi-Cash Services Corp Ltd (SGX: 5UF) is actually under Aspial’s corporate umbrella too.

On 8 May 2015, Aspial had released its financial results for the three months ended 31 March 2015. It said that its revenue for the quarter had fallen by 22% from S$128 million a year ago to S$100 million. The decline in sales was due to “lower revenue contributions from the Property Business and Jewellery Business, partially offset by higher revenue from the Financial Service Business”.

Aspial commented in the earnings release that the demand for properties here has been subdued due to the many property cooling measures and curbs in place. On the other hand, sales on the retail front was affected by lesser tourists coming into Singapore and an environment of lower consumer spending.

With lower revenue and an absence of fair value gains in investment properties that were seen a year ago, Aspial’s net profit for the reporting quarter ended up shrinking by 92% year over year to S$2.3 million.

As of 31 March 2015, Aspial had close to S$1.2 billion in debt (mainly bank borrowings and term notes) but had only S$69.5 million in cash. The company’s balance sheet looks bloated with debt. If we look back in time, we may know why.

Aspial has failed to generate positive cash flow from operations in a calendar year for a long time. This is a precarious situation to be in – with a lack of cash flow and with a heavily leveraged balance sheet, the firm may be putting its financial health at risk.

In the reporting quarter, Aspial did not generate any cash flow from operations either with the figure coming in at –S$25.1 million.

Aspial is now trading at a historical price-to-earnings ratio of 15 and has a dividend yield of 4.9%.

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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.