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GKE Corporation FY2025 Financial Results and Future Outlook · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Okay, let's dive in. Today, we're taking a closer look at GKE Corporation Limited.
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  You're listed in Singapore. You probably know them for warehousing and logistics,
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  but they've got their fingers in a few other pies too, making some interesting strategic moves.
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  Our mission today, cut through the numbers, figure out the why behind their
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  latest results that's for the financial year ending May 34 and 2025,
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  and maybe get a sense of what's next for them.
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  We've really gone through GKE's latest financial reports, their press releases,
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  all that good stuff to pull out what really matters.
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  Exactly. We've got the statements right here. And our focus isn't just what
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  happened, but why it happened. What really drove these results?
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  Plus, we'll look at their outlook. It seems like they're navigating a pretty
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  dynamic market, wouldn't you say? Definitely sounds like it.
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  So let's start with the big picture then.
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  Revenue. What's the top line story for GKE this past year, FY25? How does it compare?
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  Well, the headline number is
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  pretty strong. The group's total revenue hit S126.51 time million dollars.
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  That's a jump of 14.4% from the previous year's S110.5555 million dollars.
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  So quite a significant increase. 14%, okay.
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  And where did that growth come from? Was it one specific area or?
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  That's the interesting part. It was actually driven by all their segments.
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  Which, you know, points to pretty broad-based improvement across the board.
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  All segments contributing. That is impressive.
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  Can you break that down a bit for us? Where did we see the biggest movements? Sure.
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  So their core, the warehousing and logistics segment, that climbed to S94.682
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  million dollars. That's a solid 6.0% increase.
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  They said this was mostly due to better income from things like container trucking,
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  freight forwarding, their marine logistics, and also just keeping their warehouses
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  pretty full, high occupancy rates. Okay, so the core business is chugging along
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  nicely. What about the others?
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  Then you've got infrastructural materials and services. This is mainly their China operations.
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  That one really surged up 20.9% to S24.294 million dollars.
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  And the driver there was higher sales volume of ready-mix concrete, or RMC as they call it.
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  Right. And I think I saw a new segment pop up too. You did.
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  The retail and distribution segment, it was newly established in FY25.
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  It kicked in $6.290 billion, still relatively small, but it's a start.
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  Contributing to the overall growth. And the agriculture piece.
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  Yep. Even agriculture, that's their indoor vegetable farming,
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  it grew 13.3% to S1.253 million dollars.
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  Again, higher sales volume was the key there. So you see, it really was growth
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  coming from, well, everywhere.
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  That's quite an uplift across the board then. Yeah.
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  But looking a bit deeper, what about gross profit and the gross margin?
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  I noticed that margin dipped slightly from 29.4% down to 28.8%. What's going on there?
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  Ah, good catch. Yes, while the actual gross profit did increase,
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  it was up 12.1% to S36.383 million dollars.
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  The overall gross margin percentage did soften just a touch.
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  The main reason for that slight dip is actually that new retail and distribution
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  segment we just talked about. Oh, interesting. How so?
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  Well, it seems a business inherently has a lower gross margin profile compared
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  to their traditional warehousing or materials businesses.
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  So while it's adding revenue dollars, each dollar brings in a slightly smaller
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  percentage of gross profit, pulling the average down a little.
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  So it's not necessarily a red flag about their main operations getting less
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  efficient, but more about the mix changing. Precisely. It's a mix effect.
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  And what's really fascinating and important to note is that this dip was partly
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  offset because the gross margins in their core warehousing and logistics and
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  the infrastructural material segments actually improved.
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  So the core businesses are becoming more efficient, but the new venture,
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  while growing the top line, just naturally has a thinner margin, at least initially.
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  It's a common dynamic when companies diversify.
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  Okay, that makes sense. Strategic trade-off, perhaps.
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  Now, let's get into the really interesting part, the profit levers.
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  Beyond sales and gross profit, what happened with expenses and other income?
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  Because the profit before tax figure looks like it took a huge leap.
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  It absolutely did. This is where you see some really significant moves.
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  Profit before tax jumped, get this, 83.7%. It went from $6.760 million in FY24
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  up to S12.418 million members in FY25.
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  Wow, 83.7%. That's massive. What drove such a big increase? It must be more
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  than just the revenue growth.
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  Definitely. There are a few key factors. First, they had a net gain of about
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  S1.1 million dollars from selling off some mining rights and an investment they
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  had in a quarry company in China.
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  OK, a one off gain, but still significant. Yes.
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  And second, and this is quite interesting, they saw a huge improvement.
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  S3.2 million dollars worth related to expected credit losses for receivables in China.
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  Basically, think of it as they'd previously set aside money,
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  assuming certain debts wouldn't be paid back.
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  But this year, they essentially reversed that. They recovered funds they thought
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  were lost. That's a big swing.
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  Right. So a provision reversal. That's a nice boost to the bottom line. What about costs?
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  On the cost side, they actually managed to decrease administrative expenses
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  slightly by 1.6 percent down to S.
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  23.742 million dollars.
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  That's despite having higher staff costs and, you know, costs related to that
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  new retail segment. They said it was partly due to lower legal and professional fees.
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  Keeping a lid on admin costs, even with expansion.
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  Exactly. And another big one, finance costs, what they pay on their debt.
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  That dropped by 19.4% to S2.183 million dollars.
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  That was mainly because they had lower outstanding bank loans and also lower
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  interest expenses on their lease liabilities.
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  Good debt management there. So it's a combination then. Strategic disposals,
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  recovering bad debts, keeping admin costs tight, and lower financing expenses.
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  Yeah. That really paints a picture. Any other smaller bits moving around?
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  Just briefly, marketing and distribution costs were up marginally,
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  which you'd kind of expect with higher sales. Other expenses were mainly some
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  net foreign exchange losses, which can happen.
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  And one area that went slightly the other way was their share of results from
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  associates that flipped from a small profit to a small loss.
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  They mentioned lower sales volume from one particular recycling venture, Cheng Sihaoyi.
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  But overall, those big positive factors really dominated. Yeah,
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  that S$1.1 million gain and the S$3.2 million recovery are huge.
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  Really shows how specific financial management moves can have a massive impact.
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  So where does all this leave the final net profit, the number attributable to
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  the owners? And what does it mean for shareholders?
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  Well, all those factors we discussed, strong revenue, the gain,
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  the recovery, cost control, they flowed right down to the bottom line.
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  Net profit attributable to owners more than doubled. It jumped 105.6% to S8.849
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  million dollars in FY25.
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  That's up from S4.3 other $303 million the year before. Doubled.
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  And that translates directly to earnings per share, right? What the company
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  earns per share outstanding.
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  Exactly. Basic earnings per
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  share EPS mirrored that jump. It was up 105.4% to 1.15 Singapore cents.
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  That's compared to S3.5, 6 cents in FY24.
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  And what about dividend? Did shareholders see a bigger payout?
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  They did. GKE proposed a final dividend of 4.35 Singapore cents per share,
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  added to the interim dividend.
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  That brings the total for FY25 to 0.40 Singapore cents. That's double the 0.2
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  ring Singapore cents they paid out for FY24.
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  So yeah, a stronger bottom line and a significantly better return directly to
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  shareholders this year.
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  Okay, so the income statement looks very healthy, profitability is way up.
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  But what about the overall financial hell, the foundation? Let's switch gears to the balance sheet.
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  How does their position look? Yeah, looking at the balance sheet gives us that
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  snapshot of their financial health.
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  Total equity, essentially the owner's stake or the company's net worth,
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  increased by 6.1%. It reached $100.1 million as of May 31st,
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  2025, up from S-94.3 million dollars.
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  That growth mainly came from the profit they earned during the year.
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  But offset slightly by dividends and things. Right.
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  It was partially offset by the S-1.9 million dollars paid out in dividends,
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  a small amount, S-87,000, used for share buybacks, and also some impact from
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  foreign currency translation affecting reserves.
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  And importantly, the net asset value, or NAV, per share also increased.
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  It went from 12.22 cents to 13.0.
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  That's a good sign of underlying value growth.
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  Okay, stronger equity base. What about the other side, assets and liabilities?
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  Any big shifts there? On the asset side, current assets like cash,
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  inventory, short-term receivables, they increased by $5.6 million to $72.5 million.
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  A big part of that was more inventory, mainly, you know, for that new retail segment.
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  And also a nice increase in cash and short-term deposits, which climbed to $30.446 million.
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  More cash is always good. What about long-term assets? Non-current assets,
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  however. Think property, plant, equipment. They actually decreased by $6.5 million.
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  That was mostly due to standard depreciation, plus the disposal of those intangible
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  assets, like the mining rates we talked about, and also some impact from foreign
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  currency devaluation on overseas assets. Got it.
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  And liabilities, are they taking on more debt or paying it down?
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  Actually, total liabilities decreased, which is positive.
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  They went down from $90.816 million to S84.11 million dollars.
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  Non-current or long-term liabilities dropped quite a bit by S8.2 million dollars.
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  But that was mainly because some borrowings and lease liabilities got reclassified
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  to current, meaning they're due within the next year.
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  So current liabilities did tick up slightly because of that reclassification.
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  But the key figure here is overall borrowings that actually decreased from S42.319
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  million dollars down to S38.475 million dollars, that's a good sign they're
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  managing their debt load down.
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  So growing equity, bringing down overall debt, and building up cash.
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  So it's a pretty solid financial footing.
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  But where did all that cash movement actually happen? What does the cash flow
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  statement tell us? Right.
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  The cash flow statement shows the real money movement, and it confirms they
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  generated strong cash from their core business.
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  Net cash generated from operating activities was a healthy S22.478 million dollars in FY25.
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  That shows the day-to-day business is throwing off good cash.
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  Okay, nearly S22.5 million dollars from operations.
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  How do they use that cash? Investing. Financing. Well, in terms of investing
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  activities, they used a net $4.875 million.
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  The biggest piece was spending $7.7177 million on buying property,
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  plant, and equipment. So investing back into the business.
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  But remember, that was partly offset by the cash they got from selling those
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  mining rights, which brought in S2.563 million dollars. Okay.
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  Investing in core assets, divesting non-core.
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  Makes sense. And financing. Debt repayments, dividends.
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  Exactly. Cash used in financing activities was S13.323 million dollars.
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  That went primarily towards repaying loans and borrowings, paying down lease
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  liabilities and covering those dividend payments we mentioned earlier.
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  So clear priorities, strengthen the balance sheet, return cash to shareholders.
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  So after all that cash in from operations, cash out for investments and financing,
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  what was the net effect on their cash pile?
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  At the end of the day, their cash and cash equivalents increased by S4.28 or
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  Lowell million dollars over the year. they ended FY25 with S30.446 million dollars in cash.
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  So, connecting it all, that healthy operating cash flow combined with disciplined
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  investment and financing activities has left them with a stronger cash position.
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  That gives them flexibility, right, for future plans, expansions,
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  weathering any storms without needing to borrow heavily. Absolutely.
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  A strong finish to FY25.
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  So, with those results behind them, what are they saying about the future.
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  What's the outlook from GKE for the year ahead? And what are their strategies?
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  Well, they're sounding cautiously optimistic, but also realistic.
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  They acknowledge that their main warehousing and logistics business is probably
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  going to face some, as they put it, dynamic and evolving challenges over the next year.
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  They point to the usual suspects, ongoing global trade tensions,
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  a general economic slowdown, things that can definitely impact logistics demand.
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  Okay, so they're aware of the potential headwinds. Are they just bracing for
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  impact, or do they have plans to keep growing?
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  Oh, they definitely have plans. They're not sitting still.
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  For that core logistics business, they're looking to grow by expanding into
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  more specialized areas, things like
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  warehousing for hazardous materials or temperature-controlled storage.
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  And they're looking both in Singapore and potentially internationally for these opportunities.
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  Plus, they're focused on squeezing more value out of their existing facilities,
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  maximizing usable space, what they call asset enhancement. Smart.
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  Optimize the core while branching into higher-value niches.
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  What about the other investments, the ones that seem to be turning around? Right.
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  They specifically mentioned their strategic investments are staging a turnaround.
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  That infrastructural materials business in China, for instance,
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  they expect that to improve and expand.
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  And here's a really interesting bit. There are new regulations coming into effect
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  in China on September 15th, 2025, aimed at improving rural transport infrastructure.
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  GKE believes this could really boost demand for their ready-mix concrete plants in Wuzhou and Sanxi.
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  So, potential policy tailwind for them there. Ah, that is interesting.
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  A government initiative potentially creating demand directly for their products.
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  That could be significant. What about the other newer ventures?
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  Their agriculture business, the indoor farming, they expect that to improve
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  and expand too, presumably as they scale up operations.
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  And the new retail and distribution segment, the one focused on Singtel products,
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  they expect that to strengthen their overall portfolio and add more diversity.
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  And alongside all this expansion, they specifically mentioned they're keeping
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  a close eye on cost management.
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  Which is crucial, right? You want growth, but profitable growth.
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  The CEO, Mr. Nio Chowui, seemed pretty upbeat, calling FY25 a breakthrough year.
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  Okay, so pulling it all together quickly.
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  GKE had a really strong FY25.
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  Revenue up significantly across all segments. Net profit more than doubled thanks
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  to core business performance, those big gains and recoveries, and good cost control.
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  They've strengthened the balance sheet, paid down debt, increased cash,
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  and rewarded shareholders with a higher dividend. Seems like a solid foundation. Indeed.
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  And looking ahead, while they see challenges like trade tensions and a slower
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  economy, they're not standing still.
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  They're strategically expanding in logistics, optimizing what they have,
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  and they're seeing positive momentum in their other investments,
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  especially that China infrastructure piece, which might get a boost from new regulations.
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  It really sets up an interesting dynamic.
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  So here's something for you, our listener, to think about.
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  Given these mixed global signals, the potential headwinds, but also these specific
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  growth strategies and turnaround stories.
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  How do you see GKE balancing the challenges and opportunities in the year ahead?
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  How will that diverse portfolio.
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  Music.