SINGAPORE (Dec 27): Second Chance Properties reported a net profit of $0.22 million, or 0.03 cent per share, for 1Q19 ended Nov. This is 90.2% lower compared to the 1Q18 net profit of $2.2 million or 0.3 cent per share.

The weaker bottomline was due to losses from its apparel business which widened due to the closure of all retail apparel outlets except its flagship First Lady store in Malaysia; lower gross profit margin from its gold business; lower rental income as well as its securities segment swinging into a loss on unrealised loss recorded on financial assets.

Total revenue rose 5.74% to $6.5 million. Revenue from apparel business increased by $0.02 million to $0.63 million. While the Malaysian apparel business contributed $0.37 million compared to $0.42 million a year ago due to the depreciation in Malaysian ringgit, this was offset by better sales in Singapore.

Revenue from its gold business increased by $0.22 million to $3.08 million mainly due lower sales prices which helped to increase sales. Rental revenue from properties decreased by $0.08 million to $1.63 million as there was a loss of rental income on account of sale of an investment property as well as lower rentals received on some lease renewals.

The securities business witnessed a rise in revenue of $0.19 million to $1.13 million because of higher dividends received from some equity securities.

There was an unrealised foreign exchange loss of $0.19 million which resulted in a decrease in other income to $0.16 million. This compared to other income of $1.02 million a year ago due to the strengthening ringgit, unrealised foreign exchange gain of $0.41 million as well as a profit of $0.60 million on sale of one investment property.

As at end Nov, cash and cash equivalents stood at $10.7 million compared to $10.8 million at on Aug 31. Investment properties of the group also totalled $170.5 million while inventories totalled $14.6 million of which $12.1 million was in gold stock.

In its outlook, Second Chance says the pace of economic growth in the Singapore economy is expected to slow down next year. In Malaysia, its only flagship First Lady store is expected to be profitable although its First Lady Singapore is facing great challenges mainly from stiff competition despite changes implemented to reverse the losses.

Meanwhile, the gold business is expected to remain profitable although the downward pressure on retail rents coupled with loss of rental income from properties sold could result in lower rental income for the group.

Year to date, shares in Second Chance are down 4 cents to 22 cents.