Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily, on March 4, 2016.

 

KUALA LUMPUR: RGB International Bhd, which managed to turn around its business in the financial year ended Dec 31, 2012 (FY12) after four consecutive losing years, is now set for early redemption of its RM17.35 million commercial paper (CP) by mid-March, using internal funds.

Its chief operating officer Datuk Steven Lim said the redemption of the entire CP by the middle of this month will help the group save RM640,000 in interest.

Over the years, RGB has been generating positive cash flow and as of 31 Dec 2015, its cash balance stood at RM75.5 million. In comparison to this, its outstanding CP and medium term note (MTN) was RM16.7 million (with a 7% interest per year) and RM10 million (with a 5% interest per year) respectively.

Since returning to the black in FY12 with a net profit of RM6.04 million, RGB has managed to remain profitable. Though earnings slipped 1.2% to RM5.97 million in FY13, they more than tripled to RM18.16 million in FY14.

In its latest fourth quarter ended Dec 31, 2015 (4QFY15), the group saw its net profit rise 42.3% to RM4.26 million from RM2.99 million a year ago, as revenue improved 15.1% to RM64.73 million from RM56.25 million.

For the full-year FY15, its net profit also improved 12.6% to RM20.86 million from RM18.53 million in FY14, while revenue rose 8.6% to RM233.01 million from RM214.65 million the previous year, mainly due to a better mix of products sold and favourable impact from foreign exchange (forex) rate.

Yesterday, Lim said RGB’s sales and marketing (SSM) division’s pre-tax profit (PBT) growth of 15% in FY15 was due to sales of a better product mix with better profit margin, and favourable impact from forex rates.

As for its technical support and management (TSM) division, the 34% profit before tax (PBT) growth was attributed to better TSM performances across all region, additional revenue contribution from new outlets, and the favourable impact from forex rates.

With the group’s net profit continuing to grow in double digits, RGB is rewarding its shareholders with an interim dividend of 0.25 sen, payable on April 15.

For FY16, Lim and the management is bullish on the prospects ahead, expecting another double-digit growth in net profit.

The group is aiming to sell 1,300 gaming machines in FY16 compared with the 1,230 units sold in FY15.

Focus will be on the replacement market, especially in countries like the Philippines, where the gaming market’s competition is very high. In FY15, 80% of the 1,230 gaming machines sold were replacement machines while the remaining were new machines.

“In competitive markets, the operators tend to change their machines more frequently,” Lim said.

The group’s SSM has been awarded exclusive aristocrat distributorship in Laos and Goa as the leading provider of gaming solutions there, which are new markets to RGB.

The division will also be launching new products to local clubs in Vietnam and Singapore in April this year. New table game products will also be introduced in the second quarter of 2016.

“Additional concessions in Nepal is in the pipeline and we will explore more TSM opportunities in Goa and Vietnam,” said Lim.

RGB shares closed down 2.9% to 16.5 sen yesterday, bringing a market capitalisation of RM216.5 million. The stock is trading at a trailing price-to-earnings ratio of 10.69 times and 1.27 times its book value.

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