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Thursday, 21 February 2013

epiCentre in doldrums for FY 2013?

There have many reports that Apple is losing market on mobile devices particularly in Asia (Singapore, Malaysia, Thailand, Indonesia and other Asia countries).  This is particularly quite worrying to epiCentre as 87% of its revenue is very dependent on Apple branded products.  Its savior is probably MacBook but then again it has been mandated by Apple to drop prices on certain models in order to keep up with competition.

At half time, its revenue dropped 3.9% vs 2012; gross profit margin dropped to 11.6% in 2013 from 13.0% in 2012 and hence profit in the red $529k vs profit of $1033k in 2012.  Economy situation in both Singapore and Malaysia are quite bleak so consumer likely to cut spending on luxury Apple products and so this will hit epiCentre in the 2nd half time.  

epiCentre take the opportunity of sluggish revenue to spring clean its balance sheet and cutting certain operation costs :-  Staff cost -8% (l presume NO bonus payment? If yes then this is indeed very demoralizing but being still in employment is still paramount); Borrowings is down by almost $3m!!!  Even though this is an admirable move but then doing so when interest rate is quite low is another angle of contentious viewpoint; Cashflow from operating activities is positive.

It needs to keep a cool head to wade out this difficult financial year.  But what is Apple doing in keeping its distributors happy (and staying afloat)?  Certainly epiCentre is not so keen to keeping up with the price slashing momentum on its MacBook.  Perhaps if the much rumored smart watch product by Apple is true then this will a new revenue for epiCentre.  But wait, Apple seems to be interested in smart television too and epiCentre stores will need to be re-designed to make room for the smart television panels to be placed there.  All these unconfirmed revenue avenues from Apple is likely to keep epiCentre watching its working capital requirements very carefully so there is very high chance for it not to match and paying dividends for current financial year at last year's minimal dividend rate of $0.006.   Will Apple be able to save the day for epiCentre? 

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