FJB recorded a 3.0% YoY growth in 4QFY12 revenue to S$91.5m, while PATMI declined 11% YoY to S$1.8m. Revenue was within expectations, but PATMI came below expectation due to weaker than expected contribution from associates. Looking ahead, revenue growth is likely to be supported by (1) addition of two more brands; (2) expanding Raoul label to penetrate further into existing and new markets; (3) opening of 15 new stores (net of closures). FJB declared a dividend of 1.0 S''/ share, as it moves to conserve cash for potential investments ahead. Outlook remains challenging, although FJB's portfolio of popular lifestyle and luxury brands would be able to help it ride through near term uncertainties. As we roll forward our earnings, we derive a TP of S$0.39. Maintain BUY.

Continues to expand. The addition of VNC to its portfolio of brands would help raise its visibility in Indonesia and contribute to growth in associate income. However, this distribution business is not expected to have significant contribution in FY13, as the first store would only open in Dec 2012. FJB is currently negotiating to add two other lifestyle and luxury brands to its portfolio.

FY12 payout was a tad disappointing. FJB has been distributing at least 2.0 S''/share over the past 5 years (except FY09). Nonetheless, FY12's dividend is a 40.9% payout, which translates into a yield of 2.9%. FY12 net gearing rose to 0.4x (from 0.1x) due to expansion taken on during the year. As its business continues to grow, we think management would revert to paying higher dividends.

Effective tax rate expected to increase as FJB completes utilising its brought forward tax losses and Group tax relief. This would dampen PATMI growth and net margins, going forward. Hence, we are estimating PATMI of S$14.6m for FY13F (previously S$18.2m). Based on our DCF methodology and WACC assumption of 8.2%, we have a TP of S$0.39, which works out to 15x FY13F earnings. FJB historically trades at an average P/E of 16.8x.

Associates still doing well. FJB reported a 61% decline in share of associate's profits. Management highlighted that revenue at its Indonesian associate, PT Sukeses, is growing well. FJB has an agreement with Indonesian associate, whereby FJB charges the associate, a technical fee/market support fee (pegged to associate's revenue), for supporting the latter's operations. FJB records this as other income (+56% YoY). Hence, with increased revenue at associate level, technical fee charged to associate rises, which in turn, would impact the associate's profitability. This would result in a lower share of profits from associates.

Working capital should improve going forward. FY12's working capital declined, due to payments made to a trade creditor. FJB worked out a one-off deal with a supplier, for some discount off its purchases, should it pay the creditor within a certain timeframe. As a result, operating cash flow declined in FY12. Without such a deal in FY13, cash flows and hence, working capital, should improve.