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Accrelist turns around with final facelift

The company believes its latest move into facial recognition and medical aesthetics will help rejuvenate its fortunes.

Mr Tea says the medical aesthetics and facial recognition businesses will be the main profit drivers for Accrelist. It narrowed its FY2019 net loss to S$71,000 for the financial year ended March 31 from S$310,000 in the year-ago period.

AFTER years of restructuring and attempts to diversify away from its traditional business of electronics components distribution, Accrelist is counting on its latest move into facial recognition and medical aesthetics services as its final facelift.

The Catalist-listed company, formerly known as WE Holdings, has undergone many changes to its business focus since Terence Tea, its current executive chairman and managing director, bought a major stake in the loss-making firm in 2013 and helped to manage its debt woes.

In May 2014, it took a 25.5 per cent stake in troubled mechanical moulding business JLJ Holdings (now Jubilee Industries Holdings), which lost its major customer, Apple, after a bribery scandal involving Apple's then global supply manager.

Later, Accrelist's electronics components distribution business was injected into Jubilee and the company rebuilt its stable of customers and suppliers.

Today, Accrelist has a 65.82 per cent stake in Jubilee which has production facilities in Malaysia and Indonesia. Jubilee's products are sold to customers in Singapore, Malaysia, Indonesia, Vietnam, India, China, the US and parts of Europe.

Accrelist, on the other hand, flipped-flopped on a number of new ventures, from commodities trading to e-payments solutions.

Then last October, the company acquired Refresh Laser Clinics, a chain of four aesthetic medical clinics in Singapore, for S$4 million. In June this year, Accrelist also announced it will focus on facial recognition verification services.

"When you have nothing, you will try to grab on to everything," said Mr Tea, acknowledging that investors may have been confused by Accrelist's strategy.

But referring to Jubilee, the facial recognition and medical aesthetics businesses, he said: "I would say that these would be the three businesses that we are looking at. I don't think you will see any more surprises because I am really happy with their development.

"I think we have turned around, so we believe we are on the right track," added Mr Tea, sharing that banks that had previously shut their doors to Accrelist are now starting to speak to them.

The company, which now has 80 staff in its Singapore office, has also started conducting private roadshows, speaking to investors and analysts.

Accrelist narrowed its FY2019 net loss to S$71,000 for the financial year ended March 31, from a S$310,000 net loss in the previous year.

Revenue increased 49 per cent to S$167.1 million from S$112.5 million, helped by Jubilee's performance and Accrelist's acquisition of Refresh Laser Clinics.

Jubilee, which is also Catalist-listed, saw net profit more than tripling to S$3.3 million, from S$932,000 a year ago.

The counter, however, has traded down. Share prices hit their lowest this year after Jubilee announced a share consolidation in May. Asked if the firm might one day be taken private, Mr Tea said that was possible but declined to venture further.

Moving ahead, the medical aesthetics and facial recognition businesses will be the main profit drivers, according to Mr Tea.

He dismissed doubts over whether the company would have the relevant expertise to grow those areas.

"I didn't know about this business (electronics components distribution) four years ago," he said. "I'm someone who can adapt and pick up a new skill pretty fast."

As to how much investment and hires would be committed to the new businesses, Accrelist said it would "hire prudently in line with business expansion".

To Mr Tea, the need for medical aesthetics is clear as Singapore's population ages, and treatments become more widely accepted. "I went into it three years ago and I know the kind of changes it had on me," said the 51-year-old.

The medical aesthetics arm will produce "some good numbers" for FY2020, Mr Tea said. A fifth clinic was opened at Clementi Mall in June - it recorded over S$40,000 in sales on the day of its opening event.

For FY2019, the medical aesthetics business had about S$1.12 million in profit before tax.

The company will also "target affluent clientele in the future with long-term plans to establish a presence in Singapore's prime districts".

On the other hand, demand for facial recognition systems will be boosted by Singapore's Smart Nation push.

Accrelist will launch its system in July and appears to be competing based on price. It said the product will be priced at around S$3,000, lower than the market price of S$10,000. The technology will be "comparable" to what's out on the market.