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10 Things to Know About Second Chance Properties Ltd’s Latest Earnings

Last week, Second Chance Properties Ltd (SGX: 528) announced its financial results for the first quarter ended 30 November 2017. Here are 10 things investors should know from the earnings announcement:

1. Quarterly revenue slumped 17.4% year-on-year to S$6.1 million. All business segments – apparel, gold, properties, and securities – saw revenue declines.

2. Apparel sales declined the most by 48.3% to S$0.6 million. The main reason for the fall was the closure of thirteen shops in Malaysia since the end of August 2017. Malaysian apparel business contributed to around 69% of total apparel sales. Also, keen competition, primarily from e-commerce, resulted in the decreased revenue in both Singapore and Malaysia.

3. Other income, which consists mainly of unrealised foreign exchange gain and profit from the sale of an investment property, was S$1 million for the latest quarter. In comparison, a year ago, there was other expense of S$0.6 million.

4. Profit from operations grew 42% to S$2.5 million, largely due to higher other income.

5. Net profit surged 76.9% to S$2.2 million mainly on the back of higher operating profit and lower finance costs.

6. Even though the overall net profit increased, the apparel business posted a loss of S$0.6 million. However, this was a marked improvement from the loss of S$1.1 million seen a year back.

7. For the latest quarter, net profit margin came in at 36.5% versus last year’s 17%.

8. The balance sheet slightly strengthened for the quarter. As at 30 November 2017, Second Chance had S$7 million in cash and cash equivalents, and S$45.1 million in total debt. This translates to a net debt of S$38.1 million. In contrast, at the end of August 2017, it had a net debt of S$39.3 million.

9. The firm used S$4.1 million in operating activities during the latest period. In comparison, last year, it raked in S$2.2 million in cash from operations.

10. Looking ahead, Second Chance mentioned that, in Malaysia, three more apparel stores would be closed during the financial year when leases expire. This would leave Mega First Lady, its flagship store, as the only one operational in the country. Over in Singapore, First Lady is expected to run into losses this year and therefore, the company intends to exit the business altogether.

Second Chance closed at S$0.255 yesterday, giving a trailing price-to-earnings ratio of close to 18 and a dividend yield of 1.2%.

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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 owns shares in Second Chance Properties Ltd.