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Alset International: First Half 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 everyone to another deep dive. Okay, picture this.
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You're looking at a company's financial report, right? Eager to see how they're
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doing. And then you see something, well, pretty wild.
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Revenue has just tanked, dropped by nearly 100% year over year.
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Yet Somehow, the company's overall loss for that exact same period.
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It's barely moved, almost exactly the same. How on earth does that even happen?
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Well, today we're going to unpack just such an intriguing scenario.
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We're diving into the recent financial results for ALSET International Limited,
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specifically their unaudited condensed financial statements for the first six months of 2025.
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Our mission today is to cut through those headline-grabbing numbers.
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We want to really get to the heart of ALSET's financial performance.
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We'll explore the significant shifts, you know, both the challenging parts and
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the surprisingly stable ones.
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We'll try to understand the underlying reasons for these dramatic changes.
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And then, crucially, look at what this all means for their future outlook.
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We want to give you those aha moments,
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you know, leave you feeling truly well-informed about LSAT's journey.
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So let's jump right into that dramatic headline, LSAT's revenue.
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In the first half of 2024, it stood at a, well, a respectable S6.8 million dollars.
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But come 1H 2025, it plunged to just S23,000 dollars. I mean,
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that's practically zero compared to before, and their gross profit.
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It followed suit, plummeting from S1.5 million dollars down to only a some thousand dollars.
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On the surface, if you just saw those numbers, you'd likely think,
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you know, this company's in serious trouble, right? Oh, absolutely.
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On the surface, those figures are incredibly stark. Yeah.
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But what's truly fascinating here, and what numbers don't immediately tell you,
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is that it's not simply a collapse of business, like due to market failure or
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anything. It's largely a result of some very deliberate strategic shifts that
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LSAT International Limited has been making.
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The primary driver for that massive revenue decrease, it was in their property development segment.
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See, in the first half of 2024, LSAT recognized quite a bit of revenue from
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selling 95 lots in their Black Oak project.
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Fast forward to the first half of 2025, and there were, well,
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virtually no sales like that.
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This single factor, just that difference in property sales, explains the bulk
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of that $6.8 million drop.
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Okay, so it sounds less like a failure to sell and maybe more like they'd already
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sold that batch, like a sold-out sign for that specific project phase.
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They were just recognizing the revenue from prior period sales then.
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But still, that's a huge chunk of revenue just gone.
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How does a company not see its losses completely explode after that? Exactly.
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It's a crucial distinction. It wasn't the lack of demand this period.
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It was the timing of recognition. And there's another major piece to this puzzle.
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Alcet completely stopped recognizing revenue from its food and beverage,
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or F&B, operations in 1H 2025.
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Now, this segment brought in about $6.8 million in revenue and $6.4 million
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in gross profit back in 1H 2024.
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But those F&B operations, they were entirely disposed of, sold off as part of
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the HWH International Inc., transferred to Alcet Inc.
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Back on November 20, 2024. Ah, okay.
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So if I'm hearing this correctly, it's not just like a general lack of business
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across the board or some sudden market downturn hitting everything.
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It's more like a strategic exit from one business area, the F&B,
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and a sort of natural pause in major sales from a property development that
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had a big year the previous year. That's a key insight, isn't it?
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Headline revenue drops aren't always a sign of market failure.
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They can actually be a deliberate outcome of strategy, like portfolio restructuring,
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a company choosing to shed parts to focus elsewhere. You really have to look behind the big numbers.
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But here's the real puzzle, the bit I still can't quite wrap my head around.
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How did their bottom line, their overall loss for the period,
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manage to stay almost flat with such a massive hit to the top line?
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How do you lose nearly all your revenue, but your net loss doesn't get dramatically
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worse? This is really where the story gets nuanced.
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Yeah, it's where we see this fascinating interplay of various financial movements
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across the income statement.
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Despite that dramatic revenue plunge we talked about, Owlsett's loss for the
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period only edged up slightly.
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It went from S10.999 million dollars in 1H 2024 to S11.017 million dollars in 1H 2025.
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That near flat bottom line. It's almost a master class in financial maneuvering, really.
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It shows just how many other levers they pulled across their statements,
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effectively counteracting that massive revenue hit. That is fascinating.
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So what were these levers then? What specific things were working for them during
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this, well, incredibly challenging period financially?
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Well, one of the biggest helpers, a really powerful lever that helped stabilize
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that bottom line, was the complete absence of losses from those discontinued operations.
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Remember the F&B business they sold? In 1H 2024, ALSET reported a loss of nearly
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S2 million dollars from those ops.
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But in 1H 2025, that figure was zero because they were gone.
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It's like cutting off a constant drain on your resources.
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Right. That makes sense. Stop the bleeding from that area.
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Exactly. And then we also saw a pretty healthy increase in finance income.
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It rose by about $6.4 million, up to $1639 million in 1H 2025.
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Now, this was primarily driven by interest income they received from a U.S.
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$16 million promissory note, basically a formal IOU, and it was directly related
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to that HWH International Inc. disposal.
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Ah, so selling off that business didn't just reduce losses, it actually generated
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new income from the payment terms.
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Precisely. Income from the deferred payment structure. It's quite clever.
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That is clever. Okay. And what about their costs?
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Did they manage to cut expenses after getting rid of parts of the business?
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They did, yes, in certain key areas.
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Administrative expenses, for instance, saw a decent reduction of ITSI $0.6 million.
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They dropped to $4.8 million. And that was a direct benefit of discontinuing
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the F&B business. They just didn't have those associated overheads anymore.
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Okay, that's logical. Furthermore, their share of loss from associate companies
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decreased quite significantly by S2.1 million dollars.
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This was largely because of a reduced share of loss coming from LSAT SPAC Group,
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Inc., although it was partially offset by an increased share of loss from HWH
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International, Inc., which, remember,
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transitioned from being a subsidiary they controlled to an associate company
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they just have influence over.
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Right, so the accounting changes there, too. Less direct ownership means recognizing
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its performance differently. Exactly.
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It changes how losses flow through to LSAT's books. Less direct impact.
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And one more thing within other income. While that whole category decreased
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overall, it included a new S1.2 million dollar fair value gain on promissory notes booked at FETPL.
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FETPL stands for fair value through profit or losses. It means changes in the
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market value of those notes directly hit the income statement.
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So that gain helped cushion some other reductions in that other income category. Wow.
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OK, so a number of positive impacts, many tied directly or indirectly to that
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strategic HWH disposal, kept the bottom line from falling much further.
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It sounds like they did a really good job plugging some holes and even generating
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new income streams from that restructuring.
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But it wasn't all smooth sailing, was it? Because the loss still ticked up slightly.
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Where did the new pressures come from on the expense side? Right. It wasn't all positive.
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While those factors were crucial for offsetting the revenue loss,
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this wasn't a one-way street. Other areas definitely saw significant upward pressure.
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Overall, that other income category we just mentioned, despite the promissory
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note gain, it actually decreased by S$1.3 million overall.
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That was due to less fair value gain coming from derivative assets.
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Those are financial contracts whose value comes from something else,
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like a stock, and also less gain from convertible promissory notes.
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Plus, they just had fewer unrealized foreign exchange gains compared to the previous period.
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Okay, so less hell from those areas. And what about direct expenses? Uh, yes.
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Then there's the other expenses category. That saw a pretty significant jump.
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It went up by S2.2 million dollars, reaching S8.1 million dollars in total. What drove that?
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Well, major contributors included
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a substantial S3.5 million dollar net unrealized foreign exchange loss.
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That's a big swing from zero forex loss in 1H 2024.
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Ouch. Forex can really bite. It certainly can. They also saw increased net fair
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value losses on their financial assets held at FBTPL. Those losses grew by S$2.7
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million, rising from S$1.3 million up to S$4. million.
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And on top of that, there was a new fair value loss on derivative liabilities
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of S$2 million, plus a small C$1.1 million bad debt write-off.
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Wow. Okay. So let me try and sum this up.
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It seems like LSAT is kind of shedding old skin, right?
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Getting rid of less profitable ventures, streamlining operations.
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But at the same time, they're facing some new, more market-driven challenges,
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especially with foreign exchange swings and the valuations of their investments.
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But ultimately, that strategic divestment and the clever financial moves really
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did prevent a much, much deeper overall loss than you'd expect from that revenue drop.
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What this really complex balancing
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act shows is, I guess, the power of strategic financial management.
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Even when your top line gets hammered, a company can potentially prevent a bottom
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line disaster by actively managing its assets, selling off non-core bits,
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and optimizing its financial structure.
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It really reminds us that net loss isn't just about sales, is it?
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It's about the whole financial ecosystem of the company.
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You've absolutely nailed it. You have to look beyond just those headline revenue
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and profit numbers to see the strategic intent and the offsetting factors at
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play. That's a really crucial distinction.
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OK, so let's zoom out a bit now. Let's look at the overall health of the company.
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How did all these performance shifts translate onto their balance sheet and into their cash flow?
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Are they looking robust enough to navigate this whole transformation?
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Yeah, good question. Looking at their statement of financial position,
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that's the balance sheet.
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Comparing June 30th, 2025 to the end of last year, December 31st,
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2024, we definitely see shifts reflecting this transition.
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Total assets decreased by about $12 million.
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They went from $93.79 million down to S81.79 million.
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Net assets, which is assets minus liabilities, also followed suit.
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They decreased from S82.69 million dollars down to 71.48 million dollars.
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Okay, a general shrinking. What about working capital, their short-term health?
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Working capital, yeah, that's a crucial measure of short-term liquidity.
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It saw a notable decrease of 10.7 million dollars, settling at S34.4 million dollars.
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This is mainly because current assets dropped by S11.5 million dollars,
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although that was slightly offset by an S4.8 million dollar decrease in current
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liabilities, so less readily available assets compared to short-term debts.
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So a tighter position there.
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What were the key movements within those assets driving that overall decrease?
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Well, looking at specific asset movements...
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Their investment in associate companies decreased by $0.6 million.
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That's mainly reflecting the share of loss from HWH International Inc.,
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now that it's an associate.
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Interestingly, though, non-current financial assets, longer-term ones,
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actually increased by S1.2 million.
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And that was driven by that fair value gain on the promissory notes at FETPL
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we discussed earlier. Right, the ones linked to the HWH sale.
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Exactly. However, current financial assets, the shorter term ones,
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decreased by S1.3 million dollars overall.
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Now, this was largely due to that S4.3 million dollar fair value loss hitting them.
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It's worth noting, though, they were very active here. They made acquisitions
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of S34.9 million dollars, but that was mostly offset by disposals of S32.2 million
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dollars during the period.
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OK, so it sounds like a shrinking balance sheet overall, but one that's being
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actively managed, especially in that investment portfolio.
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Lots of buying and selling. What about cash flow? That's always critical.
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Are they burning through cash, or are they managing to generate some during this big shift?
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Unfortunately, it looks like they were burning through cash during this period.
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ALSET saw a net decrease in cash and cash equivalents of $7.4 million.
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That brought their total cash balance down to $18.8 million at the end of June
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2025. So definitely a draw on their cash reserves.
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Okay, $7.4 million out the door. Where did that cash go?
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Operations, investing. It was spread across activities. cash used in operating
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activities was at $4.7 million.
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Now, this outflow was mainly related to that S11.zala loss before tax,
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but then it gets adjusted for all the non-cash items, like depreciation,
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those fair value changes we talked about, and the foreign exchange losses.
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Working capital changes actually had a mixed effect. A decrease in payables
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was largely offset by a decrease in receivables, but the net result was still
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cash flowing out from operations.
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Got it. And investing activities. Cash used in investing activities was $2.6
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million. This was mostly driven by purchasing S$34.8 million worth of financial assets.
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But as we noted from the balance sheet changes, that was largely offset by S$32.2
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million in proceeds they got from selling other financial assets.
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So net outflow from that active portfolio management.
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Right. Lots of churn, small net outflow and financing. Financing activities
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used a much smaller amount, only $30.2 million.
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That was primarily just for lease payments. No major debt changes or equity
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raises mentioned there.
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Okay. So putting it all together, while the income statement showed the really
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fascinating balancing act between revenue loss and offsetting factors.
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The balance sheet and cash flow paint a clearer picture of a shrinking overall
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footprint and, importantly, a definite draw on cash reserves to fund both the
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ongoing operations and that active investment strategy.
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It really underscores that this is a company very much in active transition,
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both financially and strategically. They're definitely right in the middle of a significant shift.
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Now, OK, we've dug deep into the numbers. We've seen the impact of these changes,
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let's talk about the future.
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What is ALSET looking at for the next reporting period, say, in the next 12 months?
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What's their actual plan to navigate all these changes and try to build for the future?
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Yeah, the company's commentary gives us some good clues here.
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They outline a pretty clear strategic reorientation.
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The focus seems to be on optimizing the assets they still have and actively
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exploring new opportunities, especially in property and investments.
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For their property development outlook, specifically thinking about that Black
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Oak project again, they're basically finalizing the remaining lot development
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and construction there.
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They're also evaluating four model home lots that were previously reserved.
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They're trying to decide whether to pursue contract build agreements for those
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or just sell them as finished lots.
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They say the decision will be based on market trends, trying to optimize value
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and maintain flexibility.
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So being very deliberate about
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getting the most value from those remaining Black Oak assets makes sense.
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What about new property ventures? Because property development is so capital
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intensive, how are they approaching that given the cash outflow?
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That's a key question. And yes, they are looking at new development.
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They mentioned actively pursuing a feasibility study on some raw land near a 500-year floodplain.
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The idea is to potentially create a new section, Section 5, with maybe seven or more lots.
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Here's the really interesting part, tying into your capital question.
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They have a strategic land sourcing plan.
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Their intention is to source land where local government agencies like the county
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or a special district will actually reimburse the majority of the infrastructure costs.
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Ah, so they're trying to shift some of that big upfront financial burden.
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Exactly. It's a very smart approach if they can pull it off.
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It aims to reduce their own capital outlay significantly, which is crucial in
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a capital-hungry industry-like development, especially when cash flow is negative.
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That is a significant strategic pivot, trying to leverage external funding for infrastructure costs.
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Very interesting. And what about the food and beverage business,
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the one they sold off? Is that chapter just completely closed for them now? Not entirely, it seems.
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While the direct operations were transferred with HWH International Inc.,
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ALSET still retains an interest.
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They hold marketable securities in HWH, making it an associate company.
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They state their intention is to participate in HWH's future growth through that holding.
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So they still have skin in the game, just indirectly.
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Furthermore, they explicitly say they remain open to exploring new F&B opportunities,
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but only ones that align with their revised strategic focus and can enhance shareholder value.
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Okay, so maybe a more opportunistic approach there. Less direct operational
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involvement, perhaps more investment-led if something comes up.
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That seems to be the implication, yeah. A less hands-on role than before.
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And their investment business. You mentioned they were very active buying and
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selling financial assets.
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Is that becoming a bigger strategic focus? Absolutely, it appears so.
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The commentary explicitly states the company will continue to explore potential
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investments in the shares of listed companies for the rest of FY 2025.
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This really underscores that move towards a more asset-light,
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maybe investment-focused model across the whole group.
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Their overall group strategy, as they stated, has a strong focus on optimizing
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their corporate structure, improving operational efficiency,
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and, crucially, reducing costs across the board.
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They also emphasize continuous monitoring of market trends, evaluating potential
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investments, and pursuing strategic collaborations to strengthen their market
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position and deliver, hopefully, sustainable long-term returns.
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So the key insight there might be that successful strategic pivots often involve
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shedding those direct operational burdens, maybe in favor of more capital efficient
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investment models or partnerships.
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It sounds like they're fundamentally reshaping the company's identity and its
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risk profile. I think that's a very good way to put it. Yes.
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So if I'm sort of understanding this big picture correctly, LSAT is essentially transforming.
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Moving away from being a direct operator of diverse businesses and becoming
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something more like an asset light investment focused entity,
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almost acting like a strategic holding company or a fund. Is that roughly the
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right way to look at this?
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Precisely. I think that captures the shift well. It signals a move away from
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maybe a broad conglomerate structure towards something more focused,
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potentially aiming for higher margin or more capital efficient ventures by leveraging
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strategic investments.
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And like with the property plan, external financing for major costs. Wow.
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What an incredible deep dive today into Allsit International Limited.
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Seriously fascinating stuff. We've seen a company undergoing a really significant
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transformation, a dramatic almost 100% drop in revenue, mostly due to strategic
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divestments and a pause in major property sales.
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Yet, remarkably, their overall loss for the period stayed almost stable.
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And that was thanks to this really complex interplay of factors.
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Increased finance income, lower admin costs from getting rid of operations and
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removing the losses from those discontinued ops altogether.
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We also saw how their balance sheet contracted and their cash reserves decreased
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as they navigate this transition, painting a clear picture of a company really
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in active strategic flux.
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Now, this whole journey, Elsa's story, it raises an important question,
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I think, for all of us, especially as you, our listeners, navigate your own
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investments and business interests.
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In today's really dynamic business environment, how do you actually assess a
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company's true value and its future potential when its core business is changing
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so much, when its financial performance is such a careful balancing act between
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strategic exits and new investments?
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What metrics do you look at, you know, beyond the obvious top and bottom lines
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to truly understand a company that's in transition like this?
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It really makes you think about the narrative behind the numbers, doesn't it?
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Well, we certainly hope this deep dive has given you some fresh perspectives
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and maybe a clearer understanding of LSAT International's current position and
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where they might be heading.