Bond issue talk buoys I.T. despite profit slide

Shares of fashion retailer I.T rose to a two-month high of HK$3.20 yesterday despite an 18 per cent drop in net profit following news that it will issue a dim sum bond.

A source familiar with the proposal said HSBC and Standard Chartered Bank - which will be the joint bookrunners and joint lead managers for the issue - were arranging fixed-income investor meetings for the group, to be held from Monday in Singapore and Hong Kong.

The company did not confirm the claim at yesterday's annual results briefing but executives would not rule out raising funds in the debt capital market. The fashion chain has net cash of HK$900 million, of which two-thirds are in yuan.

Meanwhile, weaker consumer sentiment last year squeezed I.T's profit margin by 2.9 percentage points to 58.8 per cent, despite a year-on-year growth of 14 per cent in total turnover for the 12 months to February.

I.T chairman Sham Kar-wai said there would be fewer markdowns this year to improve gross profit margin, which stood at 61.7 per cent the previous year. "We will offer less discounts this year as inventory turnover days has returned to a more optimal level of 160 days," Sham said.

Inventory turnover hit 196.7 days during the first half of fiscal 2012, before dropping to 165.9 days by the end of the year.