What Does Second Chance Properties Ltd Do and How Does It Make Money?
It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such a knowledge is akin to travelling to an unknown territory without a map.
On that note, let’s check out what business Second Chance Properties Ltd (SGX: 528) is involved in and how it generates its revenue.
Second Chance Properties, as a quick background, is engaged in property investment, retailing of apparel and gold jewellery, and investment and trading of financial instruments.
The annual report of the firm can clue us in on the business segments the company has, and the revenue raked in by each segment.
Let’s take a look at the table below for the revenue contribution of each segment for the financial year ended 31 August 2016 (FY2016):Source: Second Chance Properties Ltd Annual Report 2016
Revenue from the Apparel segment comes from retailing of Malay ethnic wear under the First Lady brand. Currently, the operations are in Malaysia and Singapore, with 19 of them in Malaysia and two in Singapore. Out of S$10.85 million of revenue from this segment, Malaysia contributed to 77.4% of the turnover.
Next, revenue from the Gold segment comes from the sale of gold jewellery under the Golden Chance brand. Its operations are solely in Singapore at the moment.
Under the Properties segment, the firm holds around 50 properties as investments and derives rental income from them. Out of those properties, 23 are in the Paya Lebar area in Singapore.
As at 31 August 2016, the occupancy rate of the property portfolio was at 99.7%. Apparels contributed to 27% of the rental income. This was followed by electronics and peripherals, and convenient and departmental stores, both at 19%. Holi Fashion, Cash Converter and Song & Song were the top three tenants by gross rental per month.
Last but not the least, Second Chance invests in bonds, equities and real estate investment trusts (REITs). It derives dividend/coupon income from them, making up the Securities segment.
REITs contributed to 47% of the investment portfolio; equities were at 33% while the rest of the capital were invested in bonds, as at 31 August 2016.
Most of the REITs were invested in the retail and office sector (68% of total capital invested in REITs), followed by the industrial sector (28%). Hospitality and healthcare REITs made up 2% each.
Behind every ticker symbol lies a living, breathing business. Buying a stock without fundamental knowledge of what the company does and how it makes money can be dangerous.
Now that we know the basics of Second Chance Properties’ revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash generating abilities, and more.