Aspial Corporation

Kim Eng on 29 Aug 2012

Positive moves. Aspial Corporation has instituted some positive changes in the company: 1) The spin-off of Maxi-Cash allowed the group to realize its potential value. 2) Its original jewellery business was adversely affected by high operating costs — rent and staff; through consolidation, a more apparent turnaround is  likely. Its property segment has continued to perform well: Aspial holds an attributable landbank GFA of almost 500,000 sq ft, which will be launched in 2H12.

Gems and property do go together. Aspial Corporation, also known as Lee-Hwa Jewellery, was founded in 1970 by the Koh family. When the family entered the property and hotel business in the 1990s, the older brother, James Koh Wee Meng, separated from the Group to form the Fragrance Group in 2005. The younger brother, Koh Wee Seng, now runs Aspial on his own. However, he has frequently collaborated with his brother in property development JVs.

Back in the spotlight. Aspial was thrown into the spotlight this June, when it listed its pawn-broking business, Maxi-Cash Financial Services, with a market cap of SGD88.8m, on Catalyst at SGD0.30 a share. It is one of the best-performing IPOs of 2012, with a 38% gain YTD. Aspial retains an 81.2% interest in its subsidiary.

Turning around. Aspial has turned around its jewellery business. In FY11, it closed seven non-performing stores and added two in better locations. As a result, earnings have returned after two years of losses. In addition, the newly-listed pawnbroking business has achieved exceptional growth, now accounting for 20% of sales. The Group has also recently acquired a plot of land on Tanah Merah Kechil Road through a JV with the Fragrance Group. The group’s landbank holds two more plots in KeyPoint and Tai Keng Court, which will be launched in 2H12.

Raising interim dividends. The management has proposed to increase its interim dividend from 0.5cts to 0.75cts in 1H12. The group has also issued SGD150m in medium term notes to support its capex and working capital.