Singapore’s Big Loser for the Week: Mary Chia Holdings Ltd

Mary Chia Holdings Ltd  (SGX: 5OX) had slumped by 11.1% since the end of last week to close at S$0.056 this Friday. In comparison, the market benchmark, the Straits Times Index (SGX: ^STI), had lost “only” 1.7% during the same period. This makes Mary Chia a big loser for the holiday-shortened week.

Mary Chia should be a familiar company with many Singaporeans given that its advertisements are seen often on print media as well as on television. The firm provides wellness services, such as beauty and facial, slimming, spa, and massage services for both men and women, in our shores as well as in Malaysia.

At the end of last month, Mary Chia released its results for its financial year ended 31 March 2015 (FY2015). The slimming centre  saw its revenue decline by 12.3% year-on-year to S$15.1 million as a result of lower sales from beauty, slimming, and spa treatments for both genders. This was “partially offset” by higher revenue from the firm’s investment property, training courses and product sales.

The top-line decline had a big impact on the bottom-line; Mary Chia’s profit of S$1.3 million in FY2014 had turned into a loss of S$3.3 million in FY2015..

As of 31 March 2015, Mary Chia had total borrowings of S$30.1 million and a cash balance of S$1.8 million. This puts the firm in a net debt positon of around S$28.2 million. The company was in a better position financially a year ago as it had a net debt of S$23.3 million.

The slimming centre had generated SS$794,000 in cash from operations in FY2015, down nearly 50% from the figure of S$1.4 million seen a year ago.

Going forward, Mary Chia said that it “expects to face operating challenges for the financial year ending 31 March 2016. Tight labor market and the tightening foreign labor measures in Singapore have led to higher staff cost and limited further expansion of its business operations. The [company] also faces higher cost in utilities and property rentals within the competitive local beauty and aesthetics industry.” To mitigate the challenges, the firm is looking into renewing its product mix and coming up with new product lines.

Mary Chia is now trading at 12 times its historical earnings.

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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.