Salient points

• Results were below SGX expectations. 1QFY09 net profit forms only 12.1% of their full year forecast. With the financial tsunami causing havoc with the global economies, Koda is moving into un-chartered waters and as such, it would be difficult to judge FY09’s potential performance based on the historical patterns of the past.

• Sales decline of 32.5% yoy was due to the company’s decision to tighten its credit management, resulting in lower sales from the key US and Europe region. Vietnam was a bright spot, with strong retail sales.

• Gross profit margin fell versus both 1QFY09 and 4QFY08 due to higher factory overheads, lower utilisation rate and pre-operating expenses incurred for the new factories in Vietnam.

Outlook – cautious

• The management still deems that the operating conditions make it difficult to provide investors with a view on the company’s prospects for FY09.

• The board is more worried about possible bankruptcies of any of its customers given the downgrading of many US/European retailers by credit rating agencies.

HOLD; TP: S$0.19