Neo Group Q3 net profit nearly doubles to S$3.79m

CATALIST-LISTED caterer Neo Group posted a rebound in third-quarter earnings, helped by the lack of operating lease expenses as new accounting standards were adopted, according to unaudited results released on Wednesday.

Net profit nearly doubled to S$3.79 million for the three months to Dec 31, 2019, up from S$1.97 million in the same period the year before.

Revenue increased by 2.7 per cent year-on-year to S$50.8 million, driven by recurring income from childcare and eldercare and "tingkat" delivery services in the core catering business.

Meanwhile, net profit for the nine months jumped to S$6.09 million from S$1.08 million before, as revenue rose 9.1 per cent to S$141.9 million.

Earnings per share for the nine months came in at 3.92 Singapore cents, up from 1.01 cents previously, while net asset value was 29.4 Singapore cents a share, against 26.12 cents as at March 31, 2019.

While Neo Group was in a net current liability position of S$19 million as at Dec 31, 2019, the board said that the group should - barring any unforeseen circumstances - be able to overcome its negative working capital position "in the longer term", based on synergies between the food manufacturing and supplies and trading businesses.

Neo Group also reiterated that it expects its operations to remain profitable for the year to March 31, 2020, backed by measures such as pursuing a multi-brand strategy in the catering line, and working on developing new products for the food manufacturing arm.

Citing the acquisition of wholesale food trade and manufacturer ER Group, Neo Group chairman and chief executive Neo Kah Kiat said in a statement that the group will remain focused on a "vertical integration strategy, through an advancement of the upstream supply chain that would complement and support our existing catering and manufacturing businesses and operations". 

No dividend was recommended, unchanged from the year before, which the board said was "in order to retain funds for future business expansion".

Separately, Neo Group announced that its wholly-owned Best Catering subsidiary has changed its name to Besty Pte Ltd with effect from Wednesday.