Poh Kong eyes better results

> Gold demand expected to pick up this year after two years of GST, says exec director

KUALA LUMPUR: Jewellery retail chain Poh Kong Holdings Bhd expects to better its performance in the current financial year ending July 31, 2017 (FY17), sustaining the momentum of an increase in profit for the first quarter ended Oct 31, 2016 (Q1FY17).

Speaking to reporters after the group’s 14th AGM yesterday, its executive director Ermin DM Siow said he expects gold demand to pick up this year, after two years of the Goods and Services Tax (GST) implementation.

“When GST came in 2015, it has sort of dampened the consumer’s sentiment. After two years now, I think everybody has got used to it. So we hope that we can do better than the previous financial year results.

“In addition, our economy is expected to grow (between) 4% and 5% this year, so we expect that gold demand will grow in tandem with the GDP (gross domestic product) growth,” he added.

For Q1FY17, Poh Kong’s net profit was up more than fivefold to RM1.77 million from RM336,000 in the previous corresponding quarter, mainly due to an increase in sales volume and improved profit margin.

When asked about the impact of a weakening ringgit on the group, Siow said the group is not significantly affected as it purchases its raw materials in ringgit, adding local purchases of its jewellery products are also denominated in ringgit.

“Depreciation of ringgit has some positive impact for us, where people will (turn to) buy gold for investments,” he added.

Siow said currently 15% of Poh Kong’s revenue comes from its gold investment products such as gold bars, while gold jewellery accounts for most of its total revenue.

On the group’s expansion plans this year, its business development manager Edison Choon said it plans to invest up to RM25 million to open five new stores located in shopping malls and in urban centres nationwide.

Choon said two of the outlets will be located in Johor, with an estimated total capital expenditure including inventories of about RM3 million to RM5 million per store. He said the group is looking to have at least 100 outlets in operation from the 97 outlets currently.

Poh Kong closed higher by 1.09% or half a sen at 46.5 sen yesterday, with some 242,400 shares traded.