Friday 29 Mar 2024
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GEORGE TOWN: Yen Global Bhd (fundamental: 0.35; valuation: 1.2), which manufactures the Edwin, Mustang and GA Blue brand of jeans, expects to return to profitability in the last quarter of its financial year ending July 31, 2015 (4QFY15), following the disposal of its loss-making 75%-owned subsidiary Starix Collection Sdn Bhd for RM300,000.

For FY14, Starix saw its losses widen to RM3.2 million from RM240,000 in FY13.

“We disposed of Starix [to Datuk Leow Soo Tat] on Dec 23 last year as it was dragging down our [group] revenue due to bad sales and high overhead costs in the UK. We had to clean up our balance sheet including the write-off of RM8 million worth of old stock,” Yen Global group executive chairman Goh Kok Beng told reporters after its annual general meeting on Friday.

Goh said the group is also consolidating its overseas operations and shifting its focus to domestic market to boost its earnings.

“We have decided to focus on our core business of serving the Malaysian market by introducing a new line of products under the Edwin brand including trendy schoolbags and pencil cases for students aged 14 and above.

“Yen Global will also be launching a revolutionary jersey material jeans, which is stretchable and lighter, into the market. The technology was transferred to us from Japan,” he said.

The new line will see an investment of RM3 million, said Goh, adding that another RM800,000 will be spent to open four new retail outlets in the country.

He said the exercise, timed before the Hari Raya festive season, which is traditionally Yen Global’s peak period, is expected to boost its revenue by 20% for FY15.

For 1QFY15 ended October 2014, Yen Global saw its net loss widen to RM482,000 from RM404,000 a year ago, while revenue fell 20% to RM7.85 million from RM9.87 million.

The group attributed the poor results to consumers being cautious in their purchases in anticipation of higher cost of living that will reduce their purchasing power.

Goh is confident of posting better revenue in FY15, as it increases the number of dealerships by 35 in the East Coast, Sabah and Sarawak. It currently has about 300 dealers, 11 concept stores and more than 400 departmental counters across the country.

“We are certain that the impending goods and services tax in April will not affect our business and we will maintain our retail prices. We will absorb the [higher] cost and lower our gross profit,” he said.

 

This article first appeared in The Edge Financial Daily, on January 19, 2015.

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