This article first appeared in The Edge Financial Daily on December 31, 2019

KUALA LUMPUR: Poh Kong Holdings Bhd, which saw a 155.5% jump in its first quarter (1Q) net profit, expects to end the financial year ending July 31, 2020 on a strong footing, in anticipation of higher gold prices.

Its executive chairman cum managing director Datuk Eddie Choon Yee Seiong is projecting gold price to trade at US$1,600 (RM6,576) to US$1,700 per ounce in 2020, compared with US$1,515 currently.

“We are seeing gold prices on an upward trend, hence our first quarter results were better than last year. We hope our results [for financial year 2020] will be in line with the first-quarter results,” Choon told a press conference after the company’s annual general meeting yesterday.

He said factors such as geopolitical uncertainty drive the demand and prices for gold products, as gold is seen as a safe haven. As a result, he expects to see an uptick in demand for the group’s gold investment products such as gold bars and gold bullions.

The sale of gold investment products contributed 10% to 15% of Poh Kong’s total revenue, he said.

Poh Kong’s net profit for 1Q ended Oct 31, 2019 leapt to RM8.08 million, from RM3.16 million a year ago, despite revenue declining 20.7% to RM205 million from RM258.36 million. The group attributed the higher earnings to better profit margins amid higher gold prices.

Poh Kong, however, is cautious with regard to the expansion of its outlets owning to weak consumer sentiments.

“We have three new outlets [opened] this year at IOI Mall Puchong, Aeon Mall in Nilai and Mid Valley Southkey in Johor [respectively].

“In 2020, we are looking to open one or two outlets only. We are still looking at the potential malls, but to date, nothing has been confirmed,” he said, adding that the capital expenditure for each new outlet will be between RM3 million and RM5 million.

Meanwhile, Poh Kong is planning to expand its online shopping services by establishing an in-house online shopping platform in 1Q of 2020 (1Q20).

“We will be unlike other e-commerce platforms where they have a huge advertising budget to attract a lot of traffic flows. This (our e-commerce site) serves the purpose of providing convenience to our customers,” said Poh Kong marketing manager Elizabeth Choon.

She said the group will also expand its online channels for its products by collaborating with a new e-commerce platform that it is planning to launch by 1Q20. Currently, its products can be found on e-commerce portals such as Lazada, Shopee, Superbuy and PrestoMall.

Choon stressed, however, that online sales are currently insignificant compared with its physical store sales.