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Samko Timber First 6 Months 2025 Financial Results · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome to the Deep Dive. Today, we're looking at a financial story that's,
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  well, pretty astonishing.
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  We're diving into Samco Timber Limited. They've just posted financials for the
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  first half of 2025 that show this incredible swing.
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  Yeah, the numbers are quite something. Imagine going from a loss,
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  a big one, nearly 600 billion rupiah last year to a total profit of over 2.1
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  trillion rupiah in just six months this year.
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  Quite the jump. Exactly. That's a massive turnaround.
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  And your first thought might be, wow, amazing business performance.
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  You'd think so initially.
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  Yeah. But the story behind these numbers is, frankly, a lot more complex.
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  Yeah. And pretty fascinating. Definitely. So our mission today, let's unpack this.
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  We need to get beyond that headline figure, understand why this huge shift happened,
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  and figure out what it actually means for Samco going forward.
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  And to do that, we've gone right to the source, their condensed interim financial
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  statements, and the notes for the first half of 2025.
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  The actual filings. The actual filings. These aren't just summaries.
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  They let us really peek under the hood, see the details that drove this huge
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  swing. OK, so that total profit over 2.1 trillion rupiah, it looks like massive
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  success on the surface. But here's the twist, right?
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  The vast, vast majority of that profit.
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  It didn't come from their actual ongoing operations. That's the key point.
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  The statements show it clear as day.
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  Over 2.1 trillion rupiah came specifically from something called discontinued operations. Right.
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  Compared to a loss of nearly $600 billion from that same category last year,
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  a huge swing within that line item itself. So what's driving that number?
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  Well, it's almost entirely down to a massive one-off item, a gain on disposal of subsidiaries.
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  A gain on disposal, like selling off parts of the business. Exactly.
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  And it was huge, about 2.4 trillion rupiah, all booked in the first half of 2025.
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  Wow. Okay. What's fascinating here is what discontinued operations really signifies.
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  In accounting terms, it means a chunk of the business they've sold off or,
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  you know, classified as held for sale.
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  And for SEMCO, they finished selling what they call the disposed group.
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  There are stakes in certain subsidiaries back on March 27th, 2025.
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  So fairly recently in the reporting period. Yes. And this wasn't just trimming
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  the edges. this disposal fundamentally reshaped the entire company.
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  It's a strategic shift, not just better operational performance day to day. Right.
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  So what exactly did they get rid of in this disposed group?
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  A lot. If you dig into the notes, they shed massive physical assets.
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  We're talking property, plant, and equipment worth around 2.5 trillion rupiah. Okay.
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  Factories, machinery. That kind of thing. And even their biological assets for
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  a timber company, that's basically their trees, their forests.
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  It's valued at about 670 billion rupiah.
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  But maybe even more importantly, they offloaded a huge amount of liabilities.
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  Debt. Mostly debt. Over 3.4 trillion rupiah in loans and borrowings went out
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  the door with those subsidiaries. So this game isn't just profit.
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  It's also shedding a massive amount of debt burden.
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  Precisely. It's a total restructuring, a pivot away from their old model.
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  That really puts that headline profit figure in a totally different context.
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  So the old Samco, the integrated producer, is, well, mostly gone.
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  Nargely, yes. But what about the company that's left? The new Samco.
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  It's continuing operations. They also had a turnaround, didn't they?
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  They did, albeit a much smaller one.
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  Yeah, even if you ignore that huge one-off game, the ongoing business went from
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  a loss nearly 8 billion rupiah last year to a small profit of about 3.3 billion
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  this year. Correct. Correct.
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  Still a positive swing. It's modest, sure, but it's significant.
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  It's black ink instead of red.
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  What drove that improvement? The filings point directly to the commencement
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  of the trading distribution business operation in the second quarter of 2025.
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  Ah, so a completely new business line starting up. Essentially,
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  yes. That's the new focus.
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  Their revenue for these continuing operations jumped to over 123 billion rupiah
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  in the first half of this year. Of thumb.
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  Up from basically zero in the same period last year because the business didn't
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  exist then. Right. Makes sense.
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  And if we look inside that revenue number, it's a mix.
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  About 13 billion rupiah from domestic sales in Indonesia. Okay.
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  But the much bigger piece is export sales over 109 billion rupiah.
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  Oh, interesting. Where are they exporting to primarily?
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  Well, the breakdown shows North America is the dominant market.
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  Over 91 billion rupiah of that export revenue went there.
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  North America. That's quite concentrated. It is, suggests maybe strong ties
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  there or specific demand.
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  It's a key part of the new strategy, clearly, but also, you know,
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  a potential risk if that market changes. Definitely something to watch.
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  Yeah. What about costs for this new operation?
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  They manage those quite well, it seems.
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  General and administrative expenses actually decreased by about 60%. Decreased?
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  Even with a new business starting? Yeah, the notes say it's mainly due to lower
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  professional fees compared to the previous period.
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  Finance costs also dipped slightly. Okay. So if we connect this to the bigger picture.
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  Samco's clearly moving away from being that integrated, asset-heavy producer
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  towards being a leaner, meaner trading and distribution company.
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  That's a profound shift.
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  A totally different kind of company, really. And I assume this shows up dramatically
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  on the balance sheet. Oh, absolutely. The balance sheet transformation is stark.
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  Give us the numbers. Okay, get this. Total assets. End of 2024,
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  nearly 4.9 trillion rupiah.
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  Okay. Mid-2025, after the disposal.
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  Just 106 billion rupiah. Wow.
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  That's a 98% drop, roughly. Something like that. And liabilities. Same story, basically.
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  Over 6.3 trillion rupiah, down to just 93 billion.
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  So assets and liabilities both plummeted. Hugely. This isn't tweaking things.
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  It's a complete financial overhaul and maybe the most telling sign.
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  End of 2024, they had net liabilities, debts, exceeding assets by over 1.5 trillion rupiah. Oof.
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  Not a good place to be. Not at all. But by mid 2025, they had net assets of 13 billion rupiah.
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  So they flipped from owing more than they owned to owning more than they owed.
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  Exactly. A fundamental improvement in their financial health.
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  So what does this all mean, practically speaking? Well, connecting it back to
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  the disposal, the biggest practical impact was wiping out that massive debt
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  load. Right. The $3.4 trillion.
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  Yes. As of June 30, 2025, the group reported zero borrowings. Zero.
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  From $3.4 trillion. Zero at the group level. Think about that freedom.
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  It massively de-risks the company, lightens the balance sheet,
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  removes that huge interest burden. Okay, that's huge.
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  How does the cash flow look? Does it tell the same story?
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  It does, generally. Cash used in operating activities was actually pretty similar
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  year over year, around $298 billion used.
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  Investing activities saw less cash used, mainly less spent on acquiring property
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  and equipment, which makes sense post-disposal.
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  Right. But financing activities, that's where you see the action.
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  Cash provided by financing was positive, 386 billion rupiah.
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  And what drove that inflow? A few things. Some non-interest-bearing loans from
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  related parties. Loans from connected entities, basically. Yeah, interest-free.
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  Also, the net cash proceeds from actually selling those subsidiaries that brought
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  in over 61 billion rupiah.
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  They also took on a new interest-bearing loan from a third party.
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  But importantly, they made net repayments of old bank borrowings.
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  And even did a cash distribution to reduce share capital.
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  Returning some cash to shareholders. Correct.
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  So the overall picture is clear. A much, much lighter balance sheet,
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  way less debt, a genuine financial reset.
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  It really does sound like a completely new company, a clean slate almost. In many ways, yes.
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  So, okay, disposal done, new leaner model in place.
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  What's the outlook? What kind of market is this new Samco facing?
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  Well, the source material doesn't sugarcoat it. The industry landscape is described
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  as challenging. That doesn't sound great. No.
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  Even with this new model, they're still dealing with fluctuating raw material
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  costs, ongoing supply chain issues, unpredictable demand, things affecting the
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  whole plywood industry.
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  The usual suspect. Pretty much. And there's intense competition.
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  Specifically mentions other mills in Indonesia and Vietnam. What's the impact
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  of that competition? Price depreciation.
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  The documents explicitly state prices are falling in key export markets like the U.S.
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  And Korea. So even as they set up this new distribution business,
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  the prices for the products they distribute are falling.
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  Seems that way. Plus, you have potential transport delays, increased costs from
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  global events, inflation, tighter environmental rules.
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  It's a tough environment.
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  This raises an important question then. How does Samco plan to actually succeed
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  in this tough market with their new strategy?
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  And here's where it gets. Well, really interesting, as you said earlier,
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  almost circular. How so? Samco's specific new strategy.
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  They've been appointed as the exclusive distributor for products like primary
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  plywood, laminated veneer lumber, even piano parts. Okay.
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  Exclusive distributors sound good. But guess who's producing those products? Let me guess.
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  The companies they just sold. Exactly. The disposed group, the very subsidiaries they just shed.
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  So they sold the factories but signed a deal to sell everything those factories
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  make. That seems to be the arrangement. Their target markets are quite broad.
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  Singapore, Thailand, Malaysia, Philippines, U.S., Canada.
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  And this distribution business, run through a company called BioForce Peat Ltd,
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  kicked off in Q2 2025, which, as we noted, explains that new revenue stream
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  in their continuing operations.
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  So they're now essentially a middleman for their old production assets.
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  That's one way to put it, yes.
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  So to sum it up, Samco Timber has gone through this absolutely fundamental transformation
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  from this integrated, asset-heavy,
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  debt-laden timber producer losing money to a much leaner, essentially debt-free
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  trading and distribution company.
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  And their core business now relies on an exclusive deal with the production arm they just sold off.
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  It's a truly incredible story of corporate reinvention, shedding the past,
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  pivoting to an asset-light future. Absolutely.
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  But it definitely leaves us with a big question to ponder, doesn't it?
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  Given these challenging market conditions, they themselves acknowledge the competition,
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  the falling prices, the supply issues.
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  Can this new distribution model really thrive long-term? Yeah.
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  Especially when they're distributing
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  products from the very entities they apparently needed to get rid of.
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  That's the multi-billion rupiah question, isn't it?
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  What are the risks and rewards of being so tightly linked, almost dependent
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  on that disposed business, but now as their main customer, their distributor?
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  It's a fascinating strategic gamble.
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  Definitely something for you, our listeners, to think about as we watch how
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  this very unique pivot plays out in the complex world of timber.