Poh Kong cautiously upbeat on 2016 growth

KUALA LUMPUR: Jewellery retail chain Poh Kong Holdings Bhd is cautiously optimistic on its 2016 growth prospects despite registering a decrease in profit for the first quarter ended Oct 31, 2015 (Q1FY16).
“Post GST (Goods and Services Tax) implementation, the whole (retail) market was impacted negatively. Consumer sentiment has actually turned quite bad,” its executive director Ermin DM Siow told reporters after the group’s 13th AGM yesterday.
“But bear in mind, a lot of people are buying gold and jewellery for certain occasions. If they need to buy, they have to buy,” he added.
For Q1FY16, Poh Kong’s net profit fell 89% to RM336,000 from RM3.09 million in the previous corresponding quarter, mainly due to decrease in sales volume.
This was on 11% lower revenue of RM172.3 million, compared with RM194 million previously, due to a weak market sentiment, decreased in demand of gold investment products and jewellery products.
Meanwhile, the group’s executive chairman and group managing director Datuk Choon Yee Seiong noted that the depreciation of ringgit against the US dollar has brought back the demand for gold, as consumers turn to gold to hedge against the currency.
“With the weakening of ringgit, consumers are turning to gold to hedge not only against the inflation but a slowing economy,” he said.
Therefore, Choon said the group maintains a positive long-term outlook and forecasts a resilient demand for gold.
On its expansion plans for FY16, the group plans to open another three to five stores with an estimated total capital expenditure, including inventory, of about RM3 million to RM5 million per store, located in Aeon Shah Alam, Aeon Kota Baru, Sunway Velocity Mall in Kuala Lumpur and Paradigm Mall in Johor Baru.
Last year, the group opened seven outlets in Taiping Mall, AeonTaiping, IOI City Mall, Encorp Strand, Aeon Big Alor Star, Atria Shopping Gallery and Sunway Putra Mall.
Choon said the outlets contributed a total of RM14.4 million revenue or a 2% growth for FY15.
At present, the gold, jewellery and precious stones manufacturer and retailer has a network of 103 outlets across the country.
As at July 31, 2015, the group’s net assets stood at RM459.1 million over the previous year’s RM448.88 million.