DBS suspends coverage of Y Ventures after restatement of 1H18 results on admin errors; Group now expects FY18 loss

DBS suspends coverage of Y Ventures after restatement of 1H18 results on admin errors; Group now expects FY18 loss

By: 
PC Lee
28/01/19, 03:32 pm

SINGAPORE (Jan 28): DBS Group Research is suspending coverage of Y Ventures Group until a sustainable improvement in revenue and earnings can be delivered.

In a filing on Jan 21, Y Ventures reported it had made certain inadvertent administrative errors in the 1H18 results that was published in August 2018.

The administrative lapses were mainly related to overstatement of “Inventories”, “Property, plant and equipment” and “Revenue” and understatement of “Trade and other receivables”, “Cost of sales” and Administrative expenses” as at 30 Jun 2018.

Specifically, these items were: US$1.5 million being erroneously recorded as “Inventories”; US$20,500 being erroneously recorded as “Property, plant and equipment”; US$0.17 million being erroneously omitted from “Trade and other receivables” and US$0.2 million being erroneously omitted from “Administrative expenses”.

As a result, there was an overstatement of US$1.3 million ($1.8 million) of 1H18 profit.

This also means 1H18 ended in a net loss of US$1.2 million, versus profit of US$0.13 million as reported previously.

Y Ventures says it has promptly rectified the errors and issued the restated 1H18 results.

However, the group expects to report a net loss for FY18 mainly due to a drop in profit margin, increase in selling and administrative expenses and higher staff cost.

Factors which impacted the group in FY2018 included more manufacturers going direct to consumers by selling their products online and impact due to the US-China trade war.

In addition, the group incurred higher expenses due to expansion of online sales to South East Asia markets and forming partnerships with new suppliers.

In a Monday report, DBS analyst Ling Lee Keng says although the group is making efforts to diversify from its core book publisher segment and focus on getting more brand partners especially for its budding home and décor and FMCG categories, and building up its higher-margin private label segment, “these initiatives will take time to see meaningful results”.

Furthermore, the investment in the AORA ICO (Initial Coin Offering) in FY18, which the group has reduced its stake to 20%, also diverted resources away from the core business and disrupted the growth momentum of the group.

“We remain cautious and have cut FY18E/FY19F earnings. We are now expecting net loss of US$2.5 million/US$1.6 million for FY18E/FY19F vs profit of US$0.7 million/US$2.5 million previously,” says Ling.

“After cutting our earnings estimates, we arrive at a lower target price of $0.11, based on 14x FY19F EV/EBITDA which represents a 40% discount to larger peers.”

As at 3.30pm, shares in Y Ventures are down 1.6 cents or 13.3% at 10 cents.

DBS undergoes target price cuts after a record FY18, but remains a 'buy'

SINGAPORE (Feb 19): Jefferies Singapore, OCBC Investment Research and RHB Research are maintaining their “buy” calls on DBS Group while lowering their price targets to $28.50, $29.31 and $28.80, respectively. This comes after the release of its 4Q18 results, which saw earnings grow 8% y-o-y to $1.32 billion to bring the bank’s earnings for the full year to a record high of $5.63 billion. In a Tuesday report, Jefferies analyst Krishna Guha says he has lowered his FY19-20 earnings per share (EPS) estimates on the back of reduced loan and non-interest growth, although valuations remai....
Read More >>

Winners and losers from Singapore's budget as election looms

SINGAPORE (Feb 19): Singapore Finance Minister Heng Swee Keat boosted health-care and military spending, gave tax rebates to citizens and tightened rules on foreign workers ahead of an election that could come as early as this year. Heng announced a new $8 billion support package for seniors in his budget speech on Monday, as well as measures to help local businesses adopt new technologies. The expansionary fiscal plan will push the overall budget deficit to 0.7% of gross domestic product in the year ending March 2020, from a revised surplus of 0.4% this year. The finance minister opened....
Read More >>

Sasseur REIT FY18 DPU exceeds IPO forecast by 12.6%

SINGAPORE (Feb 18): The manager of Sasseur REIT announced a 4Q18 DPU of 1.999 cents, 28.1% higher than forecast. This also brings 2H18 DPU to 3.541 cents and FY18 DPU to a total of 5.128 cents. Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in China through its initial portfolio of four quality retail outlet mall assets. 4Q18 distributable income came in at $23.6 million, 28.1% higher than forecast while EMA rental income came in 1.6% higher than forecast at $31.2 million. Based on the Feb 18 closing unit price of $0.71,....
Read More >>