This article first appeared in The Edge Financial Daily, on January 28, 2016.

KUALA LUMPUR: Jewellery maker and retailer Poh Kong Holdings Bhd, which saw its sales impacted after the implementation of the goods and services tax (GST) last April, is confident it will be able to maintain the same level of earnings it saw in the financial year ended July 31, 2015 (FY15), for FY16.

Its optimism stems from its anticipation of higher demand for gold for investment and hedging amid challenging global economic developments and the weaker ringgit, and the gradual recovery in terms of sales post-GST, according to executive chairman and group managing director Datuk Choon Yee Seiong.

In FY15, Poh Kong reported an 8.8% higher full-year net profit of RM13.68 million, though its fourth quarter FY15 (4QFY15) recorded a net loss of RM5.05 million. It returned to profit in 1QFY16, with a net profit of RM336,000, though the sum is a huge decrease from the RM3.09 million it saw in 1QFY15.

“We see an improvement from 4QFY15 to 1QFY16, so the board remains confident that [we] should be able to at least maintain the same level of profits that we have enjoyed last [financial] year,” Choon told a press conference after Poh Kong’s annual general meeting yesterday.

Further, the company is expecting to see a sales boost in the upcoming Chinese New Year season, which falls in its 3QFY16, as it is historically a peak season for the company.

Poh Kong has also put in place measures to enhance its profit level, like cost and procurement control initiatives, the introduction of more affordable entry-level products, and the relocation of outlets to areas with better potential, said Choon.

“With all these measures in place, we hope that the profit level will be enhanced,” he said.

On the impact of GST on sales, the company said that though sales dropped right after the consumption tax kicked in, Poh Kong is seeing a gradual recovery in sales now following its move to absorb the tax, introduce more entry-level offerings, and conduct more in-store promotions.

To date, Poh Kong has 103 outlets nationwide, with the newest being its branch in the da:mén shopping mall in USJ.

“With regard to expansion, we [plan to] maintain it at three to five outlets per year,” said Choon.

For 2016, Poh Kong has confirmed four new outlets, one each in Aeon Shah Alam and Sunway Velocity in Selangor, Aeon Kota Baru in Kelantan, and Paradigm Mall in Johor Baru, Johor.

Poh Kong generally spends about RM3 million to RM5 million in the setting up of each new store. It is also targeting to refurbish five to six outlets this year.

Meanwhile, Poh Kong, which ventured into electronic commerce through the Rakuten online shopping mall about three years ago and another similar set up, Superbuy, recently, is looking to expand into more such electronic channels from next month.

However, allocation for its e-commerce venture remains minimal at the moment.

“The platform itself have already got its own advertising. That is why we go into these channels, because it is efficient, and gives convenience to our consumers, epecially those who probably can’t reach our retail outlets in certain areas, for example [customers in] East Malaysia.”

Poh Kong shares closed 2% higher at 50 sen with 102,600 shares traded, for a market capitalisation of RM205.1 million.