Neo Group sees robust growth in earnings

Neo Group's new central kitchen and corporate headquarters at 1 Enterprise Road became fully operational only in November, but the group is already planning another facility at 30B Quality Road.
Neo Group's new central kitchen and corporate headquarters at 1 Enterprise Road became fully operational only in November, but the group is already planning another facility at 30B Quality Road.PHOTO: NEO GROUP LIMITED

STRONG growth in the food catering division bolstered full-year earnings at Neo Group, it reported yesterday. The firm changed its financial year-end from Jan 31 to March 31, which has led to a 14-month financial year.

Net profit for the period to March 31 rose 15.7 per cent to $7.4 million, compared with the 12 months to Jan 31 last year. Revenue jumped 47.8 per cent to $77.4 million in spite of an approximately 51.8 per cent hike in expenses.

The stellar showing was mainly due to the food catering division's 47.1 per cent growth in revenue to $57.4 million. This was accompanied by a 51.6 per cent sales surge in the food retail division to $19.2 million.

Earlier this month, Neo Group announced that it will pay $7.35 million for a 55 per cent stake in Thong Siek Holdings (TSH), the surimi-based (minced fish paste) seafood supplier behind the popular DoDo fishballs.

It said yesterday that it expects to bring TSH onto its books in the financial period ending June 30.

Founder, chairman and chief executive Neo Kah Kiat told a briefing that the group will be "very aggressive" in undertaking mergers and acquisitions. He is also looking to expand overseas, with the food retail business likely to be the first to venture out.

While Neo Group's new central kitchen and corporate headquarters at 1 Enterprise Road became fully operational only in November, the group is planning another facility at 30B Quality Road to enable it to cater to 50,000 people a day, up from the existing 30,000. The project is still pending JTC Corporation's approval.

The Quality Road facility will also have a fully automated kitchen instead of the semi-automated features at the Enterprise Road facility. The firm has raised its headcount from 400 to 700 over the past year in anticipation of robust growth.

Earnings per share for the 14-month period was 5.14 cents, up from 4.44 cents previously, while net asset value per share was 16.79 cents as of March 31, up from 14.23 cents last January.

A one-tier tax-exempt final cash dividend of 1.05 cents per share was proposed, bringing the total dividends for the 14-month period to 2.56 cents per share.

Neo Group shares closed down two cents at 91 cents yesterday.

hphyllis@sph.com.sg