Senheng sees sales for consumer appliances and electronics improving this year

KUALA LUMPUR (June 24): Electrical & electronics (E&E) retailer Senheng New Retail Bhd, which posted a 1.93% drop in revenue to RM367.31 million in the first quarter ended March 31, 2022 (1QFY22), expects the trend to reverse as it is hopeful sales performance would outdo last year’s despite the rising inflation taking a toll on consumers’ discretionary spending on big ticket items.

Its executive chairman Lim Kim Heng expressed optimism and attributed this to the group’s flexible payment options offering, such as “buy now pay later” (BNPL), to assist shoppers to purchase home appliances and electronics products.

He said this payment solution has received “overwhelming response” so far as it already saw sales rebound strongly in the second quarter and expected the similar momentum to continue for the following quarters.

“We are really lucky that our customer base is more towards M40 and T20 [income groups]† For them, the rise in living costs and the impact from inflation definitely impacted their disposable income, but they are really not badly affected.

“But on the other hand, we have multiple payment modes. Consumer electronics are classified as essential products, they are no longer luxury products. So every family cannot live without a refrigerator or cannot live without a washing machine.

“So with our multiple payment modes, especially the BNPL option, the response is overwhelming. This also solves some of the shoppers’ disposable income issues. With all these multiple payment modes, our sales are not impacted at all and we are still performing very well, especially [in] the second quarter and you will see third quarter be another strong quarter for us,” Lim said at a press conference after Senheng’s annual general meeting on Friday (June 24).

On top of that, Lim said store upliftment and use of technology will improve customers’ shopping experience and also help drive sales momentum.

“The number of stores with upliftment gives us very good return on investment as we saw a huge traffic coming in especially senQ Elite, Grand senQ… those are big contributions [to our sales],” he said, adding that these refreshed retail brands on average fetch 30%-50% higher per-store sales, compared with its existing Senheng and senQ stores.

“As a technology-driven organisation, we continuously adopt the latest technology solutions. Among these are artificial intelligence-powered marketing automation; conversational commerce; e-commerce automation and mobile app technology. All these allow operational efficiency in terms of handling of service incidents ; while in marketing, this calls for machine learning and automated personalized communication that result in enhanced customer experience,” he said.

When asked about the impact of the minimum wage hike starting from May 1 this year, group chief financial officer Eric Mah said the impact has been minimal as most of its staff are already receiving salary amounts closer to minimum wage of RM1,500 set by the government. Hence, the increment or adjustment to comply with the government’s minimum wage policy is not significant.

He shared that 50% or 1,000 among its total 2,000 employees are subject to this minimum wage policy.

Senheng’s quarterly net profit decreased 26.23% to RM8.9 million in 1QFY22 from the RM12.06 million recorded in the same quarter last year on higher operating and administrative expenses, which included expenses for listing on the Main Market of Bursa Malaysia. Revenue in the same quarter eased 1.93% to RM367.31 million from RM374.56 million.

On a quarter-on-quarter basis, the group’s net profit plummeted 71.5% from 31.21 million in 4QFY21, while revenue also shrank 19.52% from RM456.39 million. It said the better 4QFY21 revenue and profit were due to year-end marketing campaigns, including members’ day sales as well as the Christmas season.

For its full financial year ended Dec 31, 2021 (FY21), Senheng reported a net profit of RM65.26 million — which Senheng said was a record high for the group and up 17.3% from FY20’s RM55.64 million — as revenue rose 11.5 % to RM1.44 billion from RM1.29 billion while cumulative earnings per share climbed to 5.22 sen from 4.45 sen.

At noon break, Senheng’s share price traded unchanged at 60.5 sen, with a market capitalization of RM908 million. Compared with its initial public offering price of RM1.07 in January this year, it has fallen 44% or 46.5 sen.

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