YOCB: Another Disappointing Quarter

YOCB FY15Q1 Financial Result

YOCB	FY15Q1	FY14Q4	FY14Q3	FY14Q2	FY14Q1
Revenue	43.9	53.5	47.2	50.7	46.5
PBT	4.6	2.4	7.8	9.8	7.1
PBT%	10.5	4.5	16.5	19.3	15.3
PAT	3.3	2.0	5.9	6.9	5.2
Total Equity	156.3	153.0	154.2	148.3	144.6
Total Assets	188.8	196.2	195.6	195.6	178.9
Trade Receivables	49.7	52.1	49.7	56.5	41.1
Inventories	66.8	65.8	69.2	68.6	62.3
Cash	29.5	35.0	32.6	31.8	36.4
Total Liabilities	32.5	43.2	41.4	47.3	34.3
Trade Payables	11.7	14.6	8.2	14.0	8.0
ST Borrowings	18.5	25.9	29.0	29.0	23.2
LT Borrowings	0.0	0.0	0.0	0.0	0.0
Net Cash Flow	-5.7	-6.4	-8.7	-9.6	-5.0
Operation	5.0	4.7	-0.8	-10.9	-0.7
Investment	-0.1	-6.4	-6.4	-0.3	-0.2
Financing	-10.6	-4.6	-1.6	1.7	-4.1
Dividend paid	3.2	6.4	6.4	3.2	3.2
EPS	2.07	1.24	3.68	4.34	3.27
NAS	0.98	0.96	0.96	0.93	0.90
Net D/E Ratio	Net Cash	Net Cash	Net Cash	Net Cash	Net Cash

YOCB made a rather bad start to its FY15 by posting a 36.5% reduction in net profit YoY from RM5.2mil to RM3.3mil. Revenue drops 5.6% to RM43.9mil in the same period.

The poorer result is mainly due to lower consignment and export sales, together with higher operating cost and again, "provision made for certain expenses".

Cash level drops mainly due to repayment of bank borrowings amounting to RM7.4mil in FY15Q1.

Out of its 3 major business segment, retailing segment is the only one that registers YoY earning growth with 15% increase in PBT. 

The other 2 segment which are design & manufacturing and distribution & trading suffer poorer PBT YoY with 52% & 35% reduction respectively.

Despite challenging & competitive local retail market, YOCB Board still "expects a satisfactory growth in the financial performance of the Group for the coming FY ending 30 June 2015".

It looks like this statement is cut & pasted to every quarterly financial reports.

YOCB earlier declared a final dividend of 2sen for its FY14, making it total 4sen or RM6.4mil dividend for the year, which represents a 32% dividend payout ratio.

Dividend yield will still be a good 4% at share price of RM1.00.

Despite poorer financial results for the past 2 quarters, YOCB will carry on with its expansion plan by commencing the construction of a new factory & warehouse on its recently acquired land.

The construction which cost RM9.3mil will begin in Dec14 and is expected to be completed in the second half of CY2015.

YOCB's inventory is getting higher while its sales and profit margin are getting lower this quarter compared to previous year.

This may indicate that it has poorer sales, and is forced to cut price or is unable to increase the selling price of its products to mitigate the rising cost at the moment in a competitive environment.

Nevertheless, why does the management still want to build a new factory & warehouse? Do they foresee better demand in the future?

I will lower net profit forecast for YOCB in FY15 to RM16mil, thus EPS will be 10sen and target price RM1.00.

As my shareholding in YOCB is very small, I may just treat it as a fixed deposit and hope for better result from year end sales.

If I have a chance to sell at a good price, then I will take it.