Zhulian always in my watch list all this while thanks to its good fundamental, dividend payout and future prospect. But its latest quarter result just released few hours ago really nothing but disappointing. Unexpected and surprisingly disappointing indeed.
Revenue for its 4th quarter dropped more than 30% quarter to quarter as well as year on year.
Share of profit of equity accounted investee at which mostly contributed by Thailand dropped even more by 60% and 56% quarter to quarter and year on year respectively.
Management mentioned drop in revenue was due to soft local spending. This one is understandable as I think everyone of us also expecting a tougher consumer sentiment this year as the price of everything but salary had increase, even the kangkung now also not cheap already, not to mention the GST that going to be implemented next year. Purchasing power will be greatly affected.
Apart from that, the management did mention the rising political uncertainties in Thailand may also cause an impact to their export demand. The political issue in Thailand may treated as an annual event, but this time it really affected the group a lot. Perhaps, the distributors no time to promote their products currently, protesting is more important :)
However, in terms of full year result, it showed a little bit increase in financial year 2013 for its revenue and net profit thanks to its strong showing in quarter two and three. Balance sheet remains strong with no borrowings. Operating cash flow increased a bit due to better changes in working capital as a result of lower trade receivables and payables. ROE remained more than 15%.
16 cents dividend for the full year of 2013. Dividend yield is around 3.5%, but probably the share price tomorrow will drop a lot. I hereby will continue to put it into my watchlist and continue to monitor its performance for the next 2-3 quarters and better it's to find out what the actual causes for this sudden drop in sales.
But one thing for sure on Zhulian case is consumer sentiment is weak currently, perhaps will continue for a while now. Have to take note on those consumer stocks.