CCFH Limited - How long before it need to raise capital in the stock market again?

23/8/2014 – CCFH Limited has granted a license to Casa Grandeur Pte Ltd, to sell bedding and bed linen products under its proprietary brands exclusively in Singapore and Malaysia.

The company formerly known as Friven & Co and prior to that Mayfran, is generally positive on the outlook, saying its 550 children’s fashion outlets should benefit from the Chinese government’s economic support packages.

It maintains its outlook for the ODM business, given the recovering US and Eurozone markets.

But it didn’t provide any revenue targets or an order book.

The company recently announced earnings for Q2:

Revenue: +93% to S$17.9 mln
Profit: +183% to S$2.3 mln
One-off gains/losses: S$274,000 vs (S$371,000)
Cash flow from operations: S$2.2 mln vs (S$966,000)
Dividend: 0 cents per share vs 0 cents per share
Order book: Not disclosed

Its ODM business is the biggest, with revenue growing 46.1% to S$10.7 mln.

Sourcing and procurement revenue rocketed 452.6%, but at S$2.3 mln is also a very small contributor.

Children’s fashion retail, which has the highest profit margins, grew 384.3% to S$4.7 mln.

Their bed linen business, which they are cutting back on, saw sales fall 50.2% to S$294,000.

Revenue growth outpaced the growth in cost of sales, admin and selling expenses, and finance costs.

Salaries, bonuses and allowances rose 75% to S$2.8 mln.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. How will it repay its debts this year?

The company says on page 5 of its Q2 financial statements that it has to repay S$20.4 mln worth of bank loans during this financial year.

But it currently only has a cash balance of S$12.4 mln.

How will it refinance its debts?

It paid off S$1.7 mln in debts during the quarter, partially offset by new borrowings.

The debts are secured against buildings in Malaysia and China.

What is the value of these buildings?

Question

2. When will they collect on their receivables?

CCFH says it is owed S$46.4 mln in trade and other receivables.

That’s three times their total revenue for Q2.

Over what time period can shareholders expect this money to be turned into cash flow?

Total number of questions in the full story: 8)

We have invited the company to an on-camera interview, and/or to reply to our questions in writing.

At the time of publication we have not received a reply (which is why you are seeing this message).

We will update this report if we do.

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