Second Chance Properties: To invest in ‘battered down stocks’

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Second Chance Properties said Monday the Covid-19 pandemic has badly affected its apparel business, and it is pivoting away from its property business toward the stock market.

That was in a filing to SGX with responses to questions from shareholders ahead of its annual general meeting (AGM) to be held Tuesday.

“Moving forward, the group has pivoted its core business from property investments and rental income to investing in battered down stocks with strong fundamentals for recurring dividend income. We expect this strategic move to contribute to greater profitability in the coming years,” Second Chance Properties said in the filing.

In its annual report, published 6 December, Second Chance Properties outlined how it would reduce the risk of its new business.

“Recognising that the stock markets can be volatile and that a stock market crash could occur at any time, we have put in strict criteria in our investment strategy that must be adhered to in order to protect our investments,” the annual report said. “These include, always maintaining a total debt to equity ratio of not more than 0.5, as well as ensuring that we have sufficient standby facilities that can be drawn down to meet any margin calls if required.”

Second Chance Properties said Monday its retail tenants were badly affected by the pandemic, leading the company to lower rents to support them. Around 28 percent of tenants are in the apparel sector, the annual report said.

The company noted Monday the pandemic hit its apparel business, which operates the First Lady brand.

“In Malaysia, multiple phases of movement restrictions were imposed by the government throughout the financial year, including a total of 105 days of store closure during phases of heightened restrictions. Even during phases where retail operations were allowed, sales were weak due to other movement restrictions in place and changes in consumer spending habits,” the company said.

“Although there were no lockdowns imposed in Singapore during the financial year, similarly weak retail conditions led to drastic decrease in sales,” the company said.

However, the company noted the gold business was boosted by the pandemic, with a substantial sales revenue increase on a change in consumer behavior amid the uncertainty.

The apparel segment posted fiscal year revenue of S$1.51 million, down 14.2 percent on-year, while gold revenue climbed 60.93 percent on-year to S$23.19 million, the annual report said.