KBS Fashion Group Limited [KBSF] Likely to Keep Gaining Despite Weak Q1 Results

KBS Fashion Group Limited [NASDAQ:KBSF], a casual menswear company based in China has been gaining steadily ever since it announced its financial results for Q1 of 2020.  At the time, the company announced that 2020 financial results were largely affected by the COVID-19 pandemic bringing down total revenues, gross and net profits for the same period 2019. In this year’s second quarter and first half’s results, total revenues were $2.3 million and $4.4 million respectively. In the same period 2019, total revenues were $4.5 million and $9.0 million. 

Gross margins for the same period in 2020 were 23% and 26% as compared to 39% and 37% in 2019. GAAP net loss and diluted loss per share were $1.1 million and $0.44 in 2020, while 2019 recorded $0.4 million and $0.15 for the second quarters of both years respectively. GAAP net loss and diluted net loss in the first half of 2020 were $3.1 million and $1.21, as compared to 2019 which were $0.61 million and $0.25. 

The Chief Executive Officer of the Company, Mr. Keyan Yan noted that weak demand in the fashion industry as a result of the effects of the COVID-19 pandemic significantly constrained the company’s revenue hence the decline.

He further noted that despite the prevailing business conditions, the company’s management responded quickly and scaled back operations to keep the business afloat. It established mechanisms to have employees work in shifts at the business premises while others were working from home. The company also rented out unutilized facilities to keep it liquid and partnered with other manufacturers to sell disposable face masks. KBS has since resumed operation since the end of March following the relaxation of COVID-19 restrictions in China.

He continued to say that KBS’s business continuity remains unaltered, and is focusing on growing the company further in the second half of 2020 through scaling up the company’s business with vendors at home and abroad and other international channels. 

Yan further said that it is KBS’s ability to adapt and survive through the prevailing circumstances that have seen the company emerge strong and exceed its projected expectations for the first half of 2020.

KBS now, according to him expects continued revenue growth come the fourth quarter of this year, as China has gradually managed to keep COVID-19 in check for the better part of the year. He concluded by saying that the company will continue taking measures to control costs and minimize expenses for further growth.

With the Chinese economy on a rebound,  and the country in control of the virus, this company is likely to keep gaining, going into subsequent quarters. 

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