2nd Chance Properties

[CityFarmer]

The last I checked, which was a long time ago, 2nd Chance's retail arm wasn't doing great. Clothing segment margins are thin, and meanwhile gold prices (which was heralded as a great hedge against inflation) aren't as high as before. With other retail stocks like FJ (though targeting different segment of the population) languishing due to terrible results, odds doesn't seem to be in their favor

Their attraction lies in their properties with most of the "profits" coming from revaluation of their properties and a steady stream of rental income. Now that the properties are going to be disposed, and most of the money going into the "retail" expansion... it kind of feels like they are throwing away good money to chase bad money. Also, previously it was mentioned that they plan to expand and IPO their retail arm i.e keeping the good stuff and disposing the bad. Now this seems like quite a deviation from their original plan which I think is not a good thing.

Since the check was long time ago, let's do a review now.

Let's look at the last 3 years segmental data, the margin of apparel segment (before unallocated expenses and tax) was around 20%, which is good. I will not consider that a "bad money".

Property revenue was good and mainly from fair value gain. Fair value gain isn't sustainable, and that was one of the key reasons I divested recently. I am glad Mr. Salleh has decided to divest it with a good price.

As rightful pointed out by other buddy, it is only a partial divestment of properties. Out of the investment property book value of $202 mil (as in FY13 result), $135 mil of investment property will be sold, which is 2/3.

The vision statement of the company is "To be a billion dollar company in market capitalisation by 2022 by focusing on real estate activities". It might need a review, and will the target still valid?

(not vested)