Second Chance Properties posts lower Q3 profit on fair value loss

SECOND Chance Properties on Wednesday posted a 27.59 per cent drop in its third-quarter net profit to S$3.14 million, weighed down by a S$460,000 loss on fair valuation of properties and lower revenue.

Revenue for the three months ended May 31, 2016, slid 3.2 per cent to S$10.2 million.

Cost of sales remained flat at S$4.66 million, down 0.39 per cent.

Earnings per share for the quarter was 0.42 Singapore cent, down from 0.64 cent a year ago.

The company said that for the nine months ended May 31, 2016, net profit fell 28.96 per cent to S$6.77 million, while revenue lowered by 8.85 per cent to S$26.85 million.

The lower net profit for the nine months is mainly attributable to a decline in its properties segment and the lower revenue is due mainly to a drop in revenue from its apparel business.

The company said that the near-term outlook for the retail sector is not encouraging both in Singapore and Malaysia due to factors such as rising business and operating costs, increasing competition from online sales and improved shopping experience in neighbouring countries.

In Malaysia, the weak ringgit is an additional negative factor.

It added that the gold business is expected to remain profitable.

The company also said that the performance of the apparel business in Malaysia should continue to improve despite decreasing revenue due to the closure of non-performing outlets.

"At least 12 other non-performing outlets have been earmarked to be closed when their leases expire. The apparel business in Singapore is expected to be profitable. Higher vacancies in retail shops is causing downward pressure on rent and this coupled with loss of rental income from sale of shops will result in lower rental income for the group."