SINGAPORE (June 30): DBS Vickers Securities is maintaining its “buy” call on Courts Asia with a slightly lower price target of 50 cents from 51 cents previously.
The electrical, IT and furniture retailer on Wednesday announced full-year earnings of $23.7 million for the FY16/17 ended March, up more than three times from its restated FY15/16 net profit of $6.8 million.
Revenue, however, declined 1.5% on-year due to softer Singapore and Malaysia sales – although operating profit improved 42% on the back of improved profitability due to a better credit-to-cash mix and efforts to reduce lower-yielding promotions and marketing expenses.
(See: Courts’ full-year earnings more than treble to $23.7 mil)
In a Friday note, lead analyst Alfie Yeo notes that the group’s first and final distribution per share (DPS) of 1.29 cents, which equates to a 28% payout ratio and keeps to FY16’s DPS level, comes in below their projected DPS of 1.65 cents.
The analysts nonetheless expect Courts Asia to open at least five new stores each in Malaysia and Indonesia.
They also look forward to better margin management on products, suppliers and servicers from the group, along with more omni-channel marketing including online platforms.
“Key earnings catalyst will be a turnaround of Indonesia business into profitability,” adds Yeo.
As at 11.02am, shares of Courts Asia are trading 1.2% higher at 44 cents.
