Poh Kong's 1Q net profit plunges 89% on weak consumer sentiment

by **Cals** Thu 17 Dec 2015, 00:45

Poh Kong's 1Q net profit plunges 89% on weak consumer sentiment

By Gho Chee Yuan / theedgemarkets.com | December 16, 2015 : 6:09 PM MYT

KUALA LUMPUR (Dec 16): [size=16]Poh Kong Holdings Bhd ([You must be registered and logged in to see this image.] Valuation: 1.60, Fundamental: 0.85) saw its net profit for the first quarter ended Oct 31, 2015 (1QFY16) plunge 89.1% to RM336,000 from RM3.09 million a year ago due to lower sales volume.

Revenue for the quarter came in 11.2% lower at RM172.29 million from RM193.95 million in 1QFY15 due to weak market sentiment, decline in demand for gold investment and jewellery products during the quarter.

Earnings per share shrank to 0.08 sen as compared to 0.75 sen in the last corresponding quarter.

According to its filing with Bursa Malaysia today, the jewellery retail chain said the main revenue contributors were gold jewellery and gold investment products.

On a sequential basis, Poh Kong has returned to profitability. It sank into the red in the fourth quarter ended July 31, 2015 (4QFY15) with a net loss of RM5.05 million due to lower sales volume coupled with higher operating expenses.

Poh Kong said next year will be a year of tough economic challenges as consumers continue to be cautious in their spending and that poses the biggest challenge in the retail industry.

Nevertheless, it is confident of maintaining its long-term plan to strengthen its market position, expansion by identifying strategic locations for future growth, refurbishing existing stores, enhancing its merchandising mix and investment in brand and human capital to meet these challenges.

It also views the outlook for the jewellery industry to remain resilient, particularly the demand for gold jewellery and gold investment products as an alternative investment to hedge not only against inflation, but also a slowing economy and weakening ringgit.

Barring unforeseen circumstances, Poh Kong is optimistic about its resilience to weather the challenges ahead for the financial year ending July 31, 2016 (FY16).

Shares of Poh Kong closed up 0.5 sen or 0.9% at 56 sen, for a market capitalisation of RM227.75 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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