Popular Holdings

[KopiKat]

What may be relevant is that operating margin has firm up from 3.1% in FY11 and 2.2% for the year before that.

And the question - What is driving the margin?

Looking at the segmental breakdown,

FY11 improvement to OM was driven mainly by their 'Retail & Distribution' where Operating Profit jumped from $10.925M (FY10) to $19.133M (FY11) and to a lower extent by 'Publishing / e-Learning'. If I remove the impairment from 'Property Development', it was providing a drag to OM.

As for FY12 9mths to date, improvement to OM is now mainly driven by 'Property Development' and to a lower extent by 'Retail & Distribution'.

Looking at the figures over the years, 'Retail & Distribution' Operating Profit bottomed in FY09 and had more than doubled for FY10 and almost doubled again for FY11. 'Publishing / e-Learning' looks volatile but remains profitable. 'Property Development' only started contributing positively from FY10 and is only slightly positive for FY11 (after removing the impairment writeback) but will likely be volatile going forward as they lack the critical mass.

[orang]

What may be relevant is that operating margin has firm up from 3.1% in FY11 and 2.2% for the year before that.

And the question - What is driving the margin?

Looking at the segmental breakdown,

FY11 improvement to OM was driven mainly by their 'Retail & Distribution' where Operating Profit jumped from $10.925M (FY10) to $19.133M (FY11) and to a lower extent by 'Publishing / e-Learning'. If I remove the impairment from 'Property Development', it was providing a drag to OM.

As for FY12 9mths to date, improvement to OM is now mainly driven by 'Property Development' and to a lower extent by 'Retail & Distribution'.

Looking at the figures over the years, 'Retail & Distribution' Operating Profit bottomed in FY09 and had more than doubled for FY10 and almost doubled again for FY11. 'Publishing / e-Learning' looks volatile but remains profitable. 'Property Development' only started contributing positively from FY10 and is only slightly positive for FY11 (after removing the impairment writeback) but will likely be volatile going forward as they lack the critical mass.

It is hard work trying to interpret the segmentals

I am incline to think 'Retail & Distribution' is growing looking at the increasing revenue and increasing earnings over the years

For 9M todate the profit at $17.7m is close to the $19.133m for the full FY11. The margin has muscled up to 5.1% the best in a long while.

This is encouraging as this segment account for 54% of the earnings

Publishing / e-Learning has some semblance of growth if you take away the swing as the result of the weaker HK dollar. This segment is a key contributor to profitability since it has the best margin and account for 33% of earnings

Guess we just have to wait for the full year results to see how the numbers pan out

[KopiKat]

It is hard work trying to interpret the segmentals

True! I got a headache staring at all the figures during the weekends after I was spurred by your 'OM' post to dig into their prior years financials from their website.

I am incline to think 'Retail & Distribution' is growing looking at the increasing revenue and increasing earnings over the years

For 9M todate the profit at $17.7m is close to the $19.133m for the full FY11. The margin has muscled up to 5.1% the best in a long while.

This is encouraging as this segment account for 54% of the earnings

Prior to FY09, Q4 always shows a Net Loss (I only checked till FY06, rest will do when I'm freer). Looking at the figures, I'm hopeful that from FY11, they may have achieved some critical mass such that their profitability had improved plus added bonus is a non Loss making Q4. But, it could also have been helped by their Malaysia operations as it was mentioned that all tertiary students were give book vouchers by their govt.

Publishing / e-Learning has some semblance of growth if you take away the swing as the result of the weaker HK dollar. This segment is a key contributor to profitability since it has the best margin and account for 33% of earnings

Looking at the past few years, it may appear so. But, way back in FY03, that segment Revenue = $66M ; Operating Profit = $10M. Not too different from FY11!

Guess we just have to wait for the full year results to see how the numbers pan out

Yup! Any time soon as last year, it was aro' now (26-Jun ?). Am hoping for a better dividend, just like the years before they embarked on Properties Devt.

[orang]

Hi KopiKat,

Noted your comment on OM. As you dig into the past be mindful OM is just my personal perference. Segmental profits are PBT numbers.

Pub/e-learning...I have no idea whether FY03 revenue is inclusive of inter segment revenue. Back then the HK dollar was much stronger than it is today. For the three years segment profits read 5.5 - 7.8 - 9.7 and 9M2012 at 10.9. Looks encouraging but I can't seem to figure out what
is driving this.

Fourth Quarter - 4Q11 pretax loss was 2.1m - an improvement on 4Q10 loss of 10.9m. This after adusting the provision and writeback.

All the quarters this year are better on a yoy basis. Seems 4Q12 may be a bonus for you after all

[KopiKat]

Noted your comment on OM. As you dig into the past be mindful OM is just my personal perference. Segmental profits are PBT numbers.

Thx! No worries.. am learning something new! Thank you for teaching me!
BTW, Popular's segmental profits are Operating Profit numbers, so can also use your OM if you can get the segmental breakdown.

Pub/e-learning...I have no idea whether FY03 revenue is inclusive of inter segment revenue. Back then the HK dollar was much stronger than it is today. For the three years segment profits read 5.5 - 7.8 - 9.7 and 9M2012 at 10.9. Looks encouraging but I can't seem to figure out what is driving this.

For now, equally blur as I have not dug into this segment. Only from FY10, then they started giving the inter-segments figures. Perhaps I should go check their AR next as it may have more detail.

Fourth Quarter - 4Q11 pretax loss was 2.1m - an improvement on 4Q10 loss of 10.9m. This after adusting the provision and writeback.

I think you forgot to plug in 'Write back of provision for stock obsolescence' = (1755) for 4Q11. That'd give a 4Q11 pretax loss = 3.85m. As for 4Q10, the figure is 304. Not so major, but I think you used the wrong polarity. If I'm correct, then 4Q10 pretax loss = 10.252m. Anyway, just for academic interest only.

All the quarters this year are better on a yoy basis. Seems 4Q12 may be a bonus for you after all

After seeing your analysis for the above para, the chances just got lower...

[lonewolf]

Good set of numbers reported by Popular for its full year.

• FY2012 revenue increased 8.6% to S$ 567.3 million; fifteenth consecutive year of record turnover since listing in 1997
  
• Profit from operations up 15% to S$35.7 million on lower than proportionate
  increase in operating expenses, reflecting healthiness of business model
  
• Proposed final dividend of 0.8 Singapore cents per share; together with
  interim dividend of 0.5 Singapore cents, totalled 1.3 cents for FY2012
  
• Organic growth of 9 new stores in FY2012 brings total to 148
  

Press Release
Results

Other comments:

1. Free cash flow has been positive for the last 5 yrs. This yr FCF = 40 mllion
   
2. $70.6 million cash and bank balances. Cash at end of yr 145 million (both highest in the last 10 yr)
   
3. Margins improves across the board. Gross margin up 2%. PBT margin up 0.4% and PAT Margin up 0.9%
   
4. Dividend yield ard 7% (based on FY closing price)
   

[KopiKat]

Good set of numbers reported by Popular for its full year.

• FY2012 revenue increased 8.6% to S$ 567.3 million; fifteenth consecutive year of record turnover since listing in 1997
  
• Profit from operations up 15% to S$35.7 million on lower than proportionate
  increase in operating expenses, reflecting healthiness of business model
  
• Proposed final dividend of 0.8 Singapore cents per share; together with
  interim dividend of 0.5 Singapore cents, totalled 1.3 cents for FY2012
  
• Organic growth of 9 new stores in FY2012 brings total to 148
  

Press Release
Results

Other comments:

1. Free cash flow has been positive for the last 5 yrs. This yr FCF = 40 mllion
   
2. $70.6 million cash and bank balances. Cash at end of yr 145 million (both highest in the last 10 yr)
   
3. Margins improves across the board. Gross margin up 2%. PBT margin up 0.4% and PAT Margin up 0.9%
   
4. Dividend yield ard 7% (based on FY closing price)
   

My comments,

- Div = 0.8ct is higher than my expected 0.7ct which is already higher than 2H11 = 0.6ct
- The key driver in earnings is from 'Retail & Distribution' with Segment Operating Profit growing from $19.1M (FY11) to $29.1M (FY12). Revenue grew from $438M (FY11) to $482M (FY12)
- This is likely to have been contributed mainly by their Malaysia Operations as Revenue grew from $164.6M (FY11) to $212.7M. Singapore grew from $253.3M (FY11) to $258.9M.
- Looks like no new units were sold in Q412 for 'Property Development' as the Segment Revenue figures was the same for Q3 & Q4. I think there's a high chance of write-down in the coming Quarters if this persist...

Nevertheless, a good set of results!

[changwk]

- Looks like no new units were sold in Q412 for 'Property Development' as the Segment Revenue figures was the same for Q3 & Q4. I think there's a high chance of write-down in the coming Quarters if this persist...

Nevertheless, a good set of results!

pls excuse my ignorance. why is there a need for writedown for unsold properties? would it just be part of the current assets of the balance sheet?

[KopiKat]

- Looks like no new units were sold in Q412 for 'Property Development' as the Segment Revenue figures was the same for Q3 & Q4. I think there's a high chance of write-down in the coming Quarters if this persist...

Nevertheless, a good set of results!

pls excuse my ignorance. why is there a need for writedown for unsold properties? would it just be part of the current assets of the balance sheet?

My thinking is assuming they really have a problem selling their units, they'll have to lower their prices (if they badly want to clear it due to the govt cooling measures introduced some time back). In such a case, they'll likely have to do some write-down. Right? Something like what happened to some of the Property cos. eg. SC Global?

[changwk]

I looked at Q3 and Q4 results, it's true that they have not sold any new properties in Q4.
if you look at Q3 and Q4 properties held for sale, the amount is about the same.

if this trend continues, there is a high chance that they might have to sell the remaining properties at a discount.