Quick read up on $ASIABRN / 7722 (ASIA BRANDS BERHAD) Annual Report FY2023 (FYE 31 March 2023)

- Principally engaged in the operation of retailing and distribution of baby apparels and lingerie which their 2 main brands are Anakku and Audrey.
- recorded a profit before tax of RM16.2 million in FYE 31 March 2023 compared to RM 20.8 million in FYE 31 March 2022, 21.9% drop in PBT due to the increase in minimum wage and initial setting up cost incurred because of the change of their business model in East Malaysia during the FY. Now, they will be directly distributing their products in East Malaysia. Also, the weakening of the Ringgit is driving the cost of products higher.
- The additional build-up in inventory was taken to prevent any unforeseen supply chain disruption.
- The Group had retired its Islamic Medium Term Note (IMTN) by making early redemption of its remaining RM20 million IMTN via internal generated funds.
- They have a history of paying dividends quite consistently.

Diving into the respective business divisions:
1. Baby Products Division
- For FYE 2023, revenue increased by 8.4% to RM138.0 million from RM127.3 million last year. However, the division registered a drop in PBT by 50.5% to RM8.1 million compared to RM16.3 million for the same period last FY. The drop in earnings was attributed to the increased cost of goods, higher minimum wage and rising transportation cost.
- Maintained the number of retail outlets and managed to open 145 more consignment counters during the year bringing a total of 376 consignment counters and 93 stand-alone outlets as at 31 March 2023. They expect the additional new consignment counters to have a material impact on revenue for the coming financial period.
- At the same time, this division continues to capitalize on opportunities to:
- expand large format stores
- enhance the baby product range
- work with other well-known baby brands
- activate more promotional fairs

2. Lingerie Division
- For FYE2023, revenue increased by 27.4% to RM44.6 million compared to last FY of RM35.0 million. Consequently, this division registered an increased PBT of 57.0% to RM7.3 million from RM4.6 million for the same period last FY. The increase in earnings was attributed to rationalization of non-productive consignment counters and stand-alone outlets in the previous year. This division is also the biggest beneficiary from post-COVID business recovery as earnings are back to pre-pandemic level.
- Closed 6 consignment counters and 1 stand-alone outlet this year in order to further rationalize our resources bringing in a total of 134 consignment counters and 52 stand-alone outlets as at 31 March 2023. They have also refurbish some older outlets.
- With this, the PBT margin further increased to 16.4% compared to 13.3% in the corresponding period last year.

**Other developments to note in FY2024 Q1, Q2, Q3:

- A director’s resolution was approved on 28 April 2023 to incorporate a new subsidiary company, P.T. Anakku Jaya Indonesia, where Anakku Sdn Bhd subscribe to 99% and Baby Palace Sdn Bhd subscribe to 1% of the total paid up capital of IDR10,000,000,000 (RM3mil) comprising of 10,000 shares.

- A director’s resolution was approved on 30 August 2023 where Simple Plan Ventures Sdn Bhd (formerly known as Generasi Dinasti Sdn Bhd), a 100% own subsidiary of Asia Brands Berhad, subscribe to 50% interest in Baby Borong Sdn Bhd for RM1 of which principal business is ecommerce.

- A director’s resolution was approved on 4 December 2023 to acquire 2,750 ordinary shares from Ang Seow Khiam and 2,250 ordinary shares from Tee Teng Li, totalling 5,000 ordinary shares fully paid-up in the capital of Isoho 365 Sdn Bhd at RM1.00 per share for a total consideration of RM5,000.

The catalyst is probably betting on Year of the Dragon to bring the baby boom, and thus needing their baby products (Anakku). Not much information is given in their QR, so will need to read their upcoming AR when it's announced.