What Investors Should Know About Design Studio Group Ltd’s Latest Earnings

Design Studio Group Ltd (SGX: D11) is a Singapore based high-end interior fit-out and joinery manufacturing company with automated manufacturing facilities in China and Malaysia. It was also featured as one of the 30 best stocks to own in Singapore for 2018.

Yesterday, the firm announced its financial results for the full-year ended 31 December 2017. Here are 10 things investors should know from the earnings announcement:

1. Revenue for the year slumped 20.6% year-on-year to S$142.0 million. The decline was due to lower contributions from all three business divisions – residential property, hospitality and commercial, and distribution.

2. Profit before tax plunged 94.1% to S$1.5 million. The company said there were three one-off items, which totalled S$8.2 million. Excluding the one-time items, underlying profit before tax would have been S$9.7 million.

3. Net profit attributable to shareholders fell from S$20.5 million in 2016 to S$1.2 million in 2017.

4. The company said that the “Singapore residential segment and Malaysia business both performed poorly due to project cost overruns, prolongation on project construction durations and lower revenue”.

5. Consequently, diluted earnings per share tumbled 94.2% to 0.46 Singapore cents.

6. As at 31 December 2017, the balance sheet had cash and short-term deposits of S$28.9 million, with negligible borrowings. This is a fall from the end of 2016 where it had a cash hoard of S$54 million and zero debt.

7. Cash flow from operations was negative S$5 million and S$3.2 million was spent on capital expenditure. Therefore, the company had no free cash flow to speak of for 2017. Last year, in comparison, it had free cash flow of S$17.4 million.

8. There will be no final dividend for the fourth quarter of 2017. An interim dividend of 1.25 Singapore cents has already been dished out in the 2017 second quarter.

9. The firm has clinched new projects worth S$57.4 million in the second half of 2017, bringing its order book to S$131.4 million.

10. Edgar Ramani, chief executive of the interior fit-out firm, said:

“Design Studio Group had a challenging FY2017. The Group underwent a transition in senior management, coupled with a downturn in the residential segment and a lack of new projects secured early in the year. However, with the economic drivers improving in Singapore and other countries we operate in, our underlying business remains strong as we continue to drive positive change and transformation across the Group”.

Design Studio’s shares ended Monday at S$0.40. This translates to a trailing price-to-earnings ratio of 87 and a trailing dividend yield of 3.1%. Meanwhile, stay tuned for an interview with Edgar Ramani and Ronald Kurniadi, Design Studio’s acting chief financial officer, in the next few days.

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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.