KUALA LUMPUR (Aug 18): Asia Brands Bhd recorded a net loss of RM9.14 million or 11.55 sen a share for the first quarter ended June 30, 2015 (1QFY15), compared to a net profit of RM7.25 million a year ago, as aggressive promotional activities and cautious consumption behaviour resulted in gross profit erosion.

The group’s revenue for the period also decreased 27.5% to RM57.76 million from RM79.66 million in 1QFY14, attributable to the implementation of the goods and services tax (GST).

In a filing to Bursa Malaysia today, Asia Brands (fundamental: 0.35; valuation: 2.0) noted that post-GST, traders and retailers were dictated by competitive market forces and were struggling to protect market share and willingly accept lower profit margins.

The depreciation of the ringgit against the US dollar has elevated market uncertainties, while traders or retailers were not allowed to increase their net profit margin for any goods or services for 18 months from Jan 2015 to June 2016, as required under the Price Control and Anti-Profiteering Act 2011.

“The group will continue to streamline on our inventories to strengthen our liquidity position and steer its focus in controlling below-the-line expenditure, and this should result in a balance between liquidity and profitability within medium to long term,” the group’s filing said.

Asia Brands closed unchanged at RM1.62 for a market capitalisation of RM128.17 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)