Maybank is keeping its “hold” call on furniture retailer Courts Asia with a target price of 36 cents.
In a Aug 24 report, analyst Truong Thanh Hang says although Courts Asia has reported steadier in recent quarters, sales will encounter more hurdles.
“Malaysia will be hit by weakening MYR; Singapore remains sluggish as Courts struggles to find its positioning; Indonesia will record a loss of an estimated $2 million,” says Truong.
Truong says recent economic malaise will likely put off discretionary consumer spending.
Despite Malaysia’s successful launch of a credit campaign in 1QFY3/16, the improvement will be offset by translational losses from weakening MYR.
In Singapore, there is no sign of revival yet, as sales have declined for five consecutive quarters, due to poor consumer sentiment.
“We expect sales to be flat this year, but could improve gradually from FY3/17, if measures to boost furniture sales prove successful. In Indonesia, sales will build over a small base but likely to break even only at end 2015,” says Truong.
On the brighter side, margins have been improving thanks to Courts’ initiatives to enhance profitability, including store makeovers; innovative retail concepts to boost sales of high-margin product categories; and launch of new credit products.
“We expect gross margins to remain high at 33% in FY16-18E,” adds Truong.
“The improvement in the previous quarters may be mitigated by the headwinds ahead. Courts will more likely be a 2016/2017 story."
Courts Asia is down 5.56% at 34 cents as at 11.32am.
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In a Aug 24 report, analyst Truong Thanh Hang says although Courts Asia has reported steadier in recent quarters, sales will encounter more hurdles.
“Malaysia will be hit by weakening MYR; Singapore remains sluggish as Courts struggles to find its positioning; Indonesia will record a loss of an estimated $2 million,” says Truong.
Truong says recent economic malaise will likely put off discretionary consumer spending.
Despite Malaysia’s successful launch of a credit campaign in 1QFY3/16, the improvement will be offset by translational losses from weakening MYR.
In Singapore, there is no sign of revival yet, as sales have declined for five consecutive quarters, due to poor consumer sentiment.
“We expect sales to be flat this year, but could improve gradually from FY3/17, if measures to boost furniture sales prove successful. In Indonesia, sales will build over a small base but likely to break even only at end 2015,” says Truong.
On the brighter side, margins have been improving thanks to Courts’ initiatives to enhance profitability, including store makeovers; innovative retail concepts to boost sales of high-margin product categories; and launch of new credit products.
“We expect gross margins to remain high at 33% in FY16-18E,” adds Truong.
“The improvement in the previous quarters may be mitigated by the headwinds ahead. Courts will more likely be a 2016/2017 story."
Courts Asia is down 5.56% at 34 cents as at 11.32am.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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