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PETALING JAYA: Poh Kong Holdings Bhd expects to maintain a satisfactory performance for its financial year ending July 31, following improved earnings in its first quarter ended Oct 31.
Speaking to the media after the group’s AGM today, executive chairman and group managing director Datuk Eddie Choon Yee Seiong said despite the fluctuations seen in gold prices, the group had performed better in Q1 FY20 compared with the previous corresponding quarter.
“We hope our performance will be in line with our first quarter results. We also strive to maintain our revenue at the same level as FY19,” he said.
For Q1, Poh Kong posted a net profit of RM8.1 million, an increase of 2.6 times from RM3.2 million seen in Q1 FY19. Revenue, however, declined 20.7% to RM205 million from RM258.4 million previously, due mainly to a decrease in demand for gold jewellery products.
The group is also forecasting an uptick in gold prices next year to between US$1,600 and US$1,700 per ounce.
At the time of writing, gold was trading at US$1,513.42 per ounce.
Choon said that while the outlook for gold prices depends on a number of factors, gold prices are generally seen to be higher next year.
“There are many uncertainties now, so gold is seen as a safe haven. Of course, higher prices are also good for us, as we will enjoy higher margins,“ he said.
In terms of mitigating the fluctuation in prices, Choon said that the group constantly monitors its inventory and finds ways to enhance stock turnover.
As for its decline in sales, Choon said that the group will be leveraging on the lunar leap month as a way to market new products.
“While we foresee more challenges in terms of the economy, we have a leap month next year that will usually increase our sales a little since we have an extra month to work with.
“There are also other festive seasons and important occasions where we will be promoting our brands to cater to these occasions,” he said.
According to the lunar calendar, the lunar leap month will run from May 23 to June 20.
Meanwhile, the group is also slowing down its outlet expansion for next year, with only one or two planned, compared with the three outlets that were opened this year.
“We are still looking for potential malls, but to date, nothing is confirmed. The names will be announced later. Market sentiment is pretty weak for the retail industry, so we are also cautious about our spending and expansion plans,” Choon said.
The capital expenditure required for each outlet is about RM3-5 million, including inventory, depending on the size of the outlet and its location.
However, Poh Kong is shifting its focus to online sales, with plans to continue expanding to other channels, even though its revenue contribution to the group is still insignificant compared to sales at physical outlets.
For FY19, Poh Kong noted an increase of more than 60% in online sales, driven by its Gold Note of Hope token, inspired by Tun Dr Mahathir Mohamad. It hopes to maintain the same level of sales, however, acknowledges it might be difficult to do so.
Choon said the group is also looking to launch its own e-shop on its website within the first half of next year.
