Second Chance Redux

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The company was founded in 1975 as a sole proprietor in tailoring. It gradually expanded to apparel and in 1993 open the first goldsmith shop. From 1996, the firm expanded its gold and retail businesses to Malaysia. In 1999, the company diversified into property investments.

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Segment & Geography  (FY August)

As market penetration reaches maturity in Singapore; expansion in Malaysia enabled Second Chance to continue her revenue growth momentum mainly through sales of apparels (geographical split from FY10-14).

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Total revenue 'peaked' in FY12 mainly because the firm changed its FY reporting from June to August. That is 2 extra months of PL activities were reflected in FYAug12. Revenue began to decline in all segments from FY13 except for Investment Trading. 

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Apparel profit fell significantly in FY15 and from FY16 onwards were loss making.

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In FY16, the firm started the process of retreating from the Malaysia apparel market with closure of 13 shops. By 2018, the company has only a First Lady Store in Singapore and a flagship store in Malaysia.

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Property Investment was the company most important income earner. In FY12 and FY13, the firm recorded substantial earnings due to fair value gains.

However, Covid-19 is expected to impact Second Chance income and fair value adjustment in FY20.

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Gold is the company most stable income earner. Last earning peak was from 2011-2012. Income started to trend up again in FY19 and is likely to continue to strengthen in FY20 with higher gold prices.

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Investment Trading income given its volatility is difficult to predict. However with a positive global equity environment in the first nine months of this year; the firm is likely to perform better relative to FY19. 

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Opinion

In the near term, business is likely to remain difficult. Gold business will provide a stable & likely growing base. Property will be a laggard with shops closure and termination of contracts. Apparel will continue to face headwind due to Covid-19. A difficult job market as well as people traveling less, means less need to buy apparels. As for Investment Trading, FY20 is likely to be a better year but the road ahead is fraught with uncertainty.