Mon, Nov 09, 2020 – 10:06 PM
NEO Group’s first-half attributable net profit grew more than five times to S$13.6 million for the period ended Sept 30, up from S$2.3 million a year ago.
This was due to higher other income contributed by higher financial grants from the government, revenue growth from its core catering and manufacturing businesses, as well as an overall reduction in operating expenses including delivery, employee benefits and advertising, it said.
This was despite a 3.3 per cent revenue dip to S$88.1 million, mainly due to lower revenue from its supplies and trading business. Earnings per share for the six months ended Sept 30 was 9.24 Singapore cents, versus 1.58 cent a year ago.
The group’s founder, chairman and chief executive, Neo Kah Kiat, noted that with the reopening of activities in June this year, there has been a gradual improvement in the performance of the catering business, which contributes over half of the group’s topline.
The group has also adapted to changing consumer behaviour by introducing a variety of options ranging from bento sets to mini buffets and healthy take-away meals, and an upscaling of the recurring “tingkat” business.
Neo Group has proposed an interim cash dividend of one Singapore cent for the six-month period, but said it will review the distribution of dividend in view of its business expansion, diversification and the construction of its headquarters and catering hub at 30B Quality Road. A year ago, it did not pay any dividend.
Neo Group’s retail business, comprising a chain of Japanese cuisine outlets, resumed operations in Phase Two. While the physical footfall and revenue of the outlets located in the heartlands have improved since then, physical footfall at the outlets located near offices and in downtown areas has remained low. The group plans to review the outlets’ performance, strategise lease renewal options with landlords and use online delivery platforms to enhance revenue.
While the short-term dormitory contracts and financial grants have helped to mitigate the impact caused by the pandemic on the group’s performance in the first half, these are expected to be scaled down or discontinued in the second half. The effects of the pandemic are thus likely continue to pose further uncertainties and may curtail its growth going forward, it said.
Barring any unforeseen circumstances, it expects to stay profitable for the fiscal year ending on March 31, 2021.
The group also recently diversified into property for additional and recurring revenue streams through rental fees and management fees, as well as potential synergies with its existing businesses, it said.
Its shares rose 6.5 Singapore cents or 15.3 per cent to S$0.49.