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Matex International’s EGM Halted By Injunction In 2025 First Half Report · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:07
  Welcome to the deep dive. Today, we're cutting through the density of corporate
• 0:11
  filings, specifically diving deep into the condensed interim financial statements
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  of Matex International Limited, or MIL, for the first half of 2025.
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  Yeah, and this one's particularly interesting because the source material tells
• 0:24
  you two, well, almost contradictory stories at the same time. Oh, so.
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  Well, on one hand, you've got a very detailed picture of a company,
• 0:33
  you know, really struggling with its core operations.
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  OK. But then simultaneously, you see this major financial rescue operation going on. Ah.
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  And right after that. Yeah. Just intense boardroom drama. The kind of stuff
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  you'd expect from a TV show, honestly.
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  Right. It's like the ultimate financial paradox, isn't it? A company reporting
• 0:51
  a significantly worse net loss, clear signs of a tough economic climate.
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  Definitely. While at the same time, their balance sheet gets propped up by this
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  crucial cash injection.
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  And all of this leads directly into what sounds like a full-scale corporate governance battle.
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  Exactly. Our goal here is to sort of connect the docks, link that financial
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  pain you see in the income statement to the, well, political upheaval happening
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  right at the top. Okay, let's start with the basics then.
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  How did the business actually perform in the first half of 2025?
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  Section one, top line performance.
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  Let's dive into the operating environment first because it was,
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  frankly, pretty rough. The big headline is revenue contraction.
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  MIL reported as $2.515 million in revenue for 1H 2025.
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  Now, compared to the S3.454 million the year before, that's a sharp drop, 27.19% down.
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  Wow, nearly 30%. That's a huge decline for their top line.
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  What drove such a steep fall in sales? Well, the company's pretty clear about
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  it in their commentary. They point to broad industry issues hitting the specialty
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  chemicals and dye stuff sector pretty hard. Like why specifically?
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  Things like high global inflation, general economic uncertainty,
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  which hurts consumer demand.
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  And that translates directly into reduced volumes, shorter production runs for MIL. OK, makes sense.
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  And you layer on top of that the intense competition.
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  And price sensitivity in their key markets, primarily China,
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  Malaysia and Singapore, it's just a tough recipe for sales. A brutal environment, no doubt.
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  But here's something that jumped out at me, maybe the most interesting number in this whole section.
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  Despite that massive revenue drop, they actually managed to improve their gross profit margin.
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  It went up. How does that work? Yeah, it did. It's a crucial point.
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  While the gross profit in absolute dollar terms obviously decreased down about
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  22 percent, the margin itself actually ticked up from 20.64%.
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  So less profit overall, but they kept more cents per dollar of sale.
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  Exactly. It's a bit counterintuitive, but it points to some operational success.
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  When sales are, you know, tanking like that, the pressure to control your cost
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  of goods sold is immense. What did they do?
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  They managed this primarily by implementing more cost-effective sourcing strategies.
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  Basically finding cheaper ways to get the raw materials they needed.
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  A small victory on the cost front. Okay, a small operational win.
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  But I guess we have to frame that against the sheer scale of the sales drought rate.
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  It's hard to cheer a 1.4% margin improvement when overall profit is down,
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  and as we'll see, the company is still losing millions.
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  That's the perfect way to put it. And unfortunately, that small gain in gross
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  margin efficiency was completely, utterly swallowed up when you look further
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  down the income statement, particularly at their general expenses.
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  All right, Section 2, the deepening loss in expense drivers.
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  Let's talk about the bottom line. Yeah, this is where that operational misery
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  really turns into a financial headache.
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  The loss attributable to the owners of the company didn't just grow,
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  it soared. We're talking a 72.74% increase.
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  73% worse. Wow. What were the numbers? It went from a loss of about S1.2 million
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  dollars in the first half of 2024 to a loss of nearly 2.1 million dollars in 1H 2025.
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  Okay, so if the gross margin actually improved slightly, where did all that
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  extra loss come from? Which line item blew up? You have to look squarely at
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  administrative expenses.
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  That category surged dramatically. It jumped by almost 33%, going from S1.9
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  million dollars up to S2.5 million dollars.
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  A $600,000 increase just in admin costs? What was the main driver there? Was it salaries?
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  Rent? Actually, the biggest chunk wasn't something easily controlled internally.
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  It was foreign currency exposure. Ah, FX.
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  That can be a killer. Especially when it swings against you.
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  And here, the numbers are really quite startling because it wasn't just a negative
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  impact. It was a massive reversal from the previous year. A reversal.
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  What do you mean? Okay, get this.
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  In the first half of 2024, MIL actually booked a net foreign exchange gain of
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  about 0.2 million dollars. Okay, a nice little tailwind.
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  Right. But just one year later, in 1H 2025, that gain completely flipped into
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  a net foreign exchange loss of approximately 0.4 million dollars.
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  Wow, so that's a $600,000 negative swing year over year just from currency. Precisely.
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  Primarily driven by the depreciation of the Chinese Renminbi RMB against the
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  Singapore dollar. That single factor, that FX volatility, accounts for the vast
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  majority of the increase in administrative expenses.
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  So external macro factors, specifically currency movements, essentially dictated
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  their bottom line for the first half.
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  It wiped out any benefit from their better sourcing.
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  Completely. And they also mentioned slightly higher compliance and professional
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  expenses, about $66,000 related to corporate exercises.
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  Which I imagine is just the tip of the iceberg, given the corporate tension
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  we know was brewing and about to explode. Exactly.
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  Those costs are like a small preview of the legal bills to come.
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  Now, there was a bit of good news elsewhere. Other income jumped 157 percent.
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  What drove that? It was mainly a one-off back-to-back transaction involving
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  chromite or trading, so not core operations.
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  Right, a one-off. And even that good news was largely offset by a sharp drop
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  in net finance income down nearly 73 percent. That was simply because they had
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  lower fixed deposit holdings earning less interest.
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  Okay, so the overall story remains. Core business struggled,
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  sales down, but the real knockout blow financially came from something outside
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  their direct control, that big FX loss.
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  That's the picture for the first half's operations. Bleak.
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  Okay, section three then. Financial position and cash flow strategy.
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  You mentioned a paradox earlier. The operations look grim, losses ballooning.
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  But let's look at the balance sheet because this is where things get well.
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  Confusing, maybe. Despite losing 73% more money, the group's total equity actually
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  went UP from $7.9 million to S9.8 million dollars.
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  How does that work? One word. Financing.
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  External financing. Ah, the cash injection you mentioned earlier.
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  Exactly. Back in January 2025, MIL completed a private placement exercise.
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  They issued 154 million new ordinary shares. And how much did that bring in?
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  It successfully generated net proceeds of S3.9 million dollars.
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  That injection was absolutely the essential lifeline. That cash inflow must
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  stand out like a sore thumb on the cash flow statement then.
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  It does. You look at their cash flows. Net cash used in operations was S3.5
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  million dollars. They burned through
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  that much just running the day-to-day business. Okay, burning cash.
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  But net cash generated from financing activities was S4.9 million dollars,
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  largely thanks to that placement.
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  Without that S3.9 million dollar net inflow, their liquidity position would
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  have looked pretty terrifying.
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  So the placement basically papered over the operational losses and kept them
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  solvent. It certainly secured their overall liquidity.
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  You see, working capital improved significantly too, from $6.2 million up to $8.3 million.
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  That new cash allowed them not just to absorb the H1 losses,
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  but also to, well, prepare for what management was clearly betting would be a better second half.
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  Prepare how? What did they do with the money besides cover losses?
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  Well, this is another interesting, maybe even slightly concerning point.
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  They significantly increased their inventories. Increased inventory after seeing
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  demand drop almost 30 percent. Yep.
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  Inventories went up from S1.6 million dollars to S2.3 million dollars. That's a big jump.
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  Why would they do that? That sounds like a big gamble, building up stock when
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  sales are weak, especially right after getting that cash lifeline.
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  It is absolutely a gamble.
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  Management justifies it in the report, saying the buildup is in line with,
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  quote, higher sales momentum, they anticipate, and needed to support committed
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  deliveries scheduled for the second half of 2025.
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  So they're betting big on a H2 turnaround. They are.
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  They're using part of that placement cash and also taking on more debt short-term
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  loans, increased from S1.1 million dollars to S1.8 million dollars.
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  Mainly drawn down by their China's subsidiaries, partly to fund this inventory growth.
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  So they're doubling down using both equity and debt to build inventory,
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  banking on future sales. Correct.
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  They're putting their newly acquired money where their optimistic outlook is.
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  They really need H2 to perform to justify this strategy. OK,
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  that sets the stage nicely for Section 4, the outlook.
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  We have this optimistic bet on inventory, but what's the broader picture?
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  Industry trends and, importantly, this corporate upheaval you mentioned. Right.
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  So the company's own commentary on the industry outlook is fairly standard,
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  you know, quite stable, but challenging. What do they highlight?
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  Rising demand for sustainable, eco-friendly dyes and chemicals,
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  which is a potential plus, but also continued intense competition,
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  especially in Asia Pacific, geopolitical tensions messing with supply chains,
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  volatile material costs.
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  It's a mixed bag, leaning towards challenging. Standard industry headwinds then.
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  But they also flagged something specific financially, didn't they?
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  About upcoming costs. They did.
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  They explicitly stated they anticipate incurring additional expenditure in the
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  coming period due to a settlement agreement and higher professional fees.
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  Ah, the settlement agreement. That sounds like the corporate drama kicking in. That's exactly it.
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  That line item, that anticipated cost, that's the financial footnote to a full-scale
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  corporate revolution that happened after the June 30th reporting date,
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  but which fundamentally changes everything about the company's outlook and stability.
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  So the real story isn't just the tough market or the FX hit,
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  it's what happened in the boardroom after these financials were closed. Precisely.
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  The period covered by these financials ends June 30th.
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  But the months immediately following July, August, September,
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  2025, saw intense shareholder warfare break out.
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  Okay, walk us through it. This sounds like the core of the paradox.
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  It started with multiple attempts to completely overhaul the board of directors.
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  You had the controlling shareholder, a group called Nanyang,
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  requisitioning an extraordinary general meeting, and EGM. To do what?
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  To remove key directors, included the CEO at the time, Dr. Tan Pan Ki,
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  and another director, Mr. Tan Guan Liang.
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  And appoint their own people. Okay, a classic boardroom power play.
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  But it wasn't just Don Yang. There was another separate group,
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  referred to as the new requisitionists, including a CSF Fundai,
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  who also filed notices calling for EGMs with similar aims, removing directors, appointing new ones.
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  So pressure from multiple shareholder factions simultaneously.
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  Yes. And this, as you can imagine, immediately triggered intense legal battles.
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  We're talking high court actions.
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  What were they fighting over in court? Well, you had the requisitioning shareholders
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  trying to force the EGMs to happen so they could vote out the board.
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  And on the other side, you had the incumbent directors fighting back,
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  launching legal actions to try and block those EGMs.
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  And crucially, the directors were also trying to validate a series of new share
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  subscription agreements worth about $3.6 million.
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  Ah, trying to issue new shares potentially to allies to dilute the voting power
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  of the shareholders trying to oust them.
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  That's the classic interpretation of such a move in a control battle, yes.
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  So two court cases were filed, HCOA 733 and HCOA 790, dealing with blocking
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  the EGMs and the validity of those subscriptions.
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  This is serious stuff. How did it play out in court?
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  It got pretty dramatic. In early September 2025, the court granted an interim injunction.
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  It actually halted Nanyang's EGM from proceeding, at least temporarily.
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  So a win for the incumbent board initially. Sort of, but the bigger story unfolded shortly after.
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  In late September, a comprehensive settlement agreement was reached involving
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  multiple parties. A settlement? What did it entail?
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  The key outcome was the termination of those contested share subscription agreements,
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  the S3.6 million dollar ones. They were canceled.
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  So the attempt to delude the opposition failed. It did.
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  And crucially, the court, even though a settlement was reached,
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  made a significant statement.
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  It indicated that, had the matter proceeded, an injunction would likely have
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  been granted against those subscription agreements anyway.
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  Why? On what grounds? Because the resolution that supposedly sanctioned those
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  subscriptions failed to comply with the company's own constitution.
• 12:55
  Wow. So the court basically said the board didn't even follow their own internal
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  rules when trying to push through those share deals.
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  That's the implication. It's a fundamental point about corporate governance.
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  The court essentially validated the core of the shareholder complaint,
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  not just a political disagreement, but a failure of proper procedure by the board. That's huge.
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  What are the immediate consequences of this settlement and the court's stance?
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  A complete boardroom clearout. The CEO managing director, Dr. Tan Pang Ki, resigned.
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  Another executive director, Mr. Tan Guan Liang, also resigned.
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  The non-executive chairman at the time also stepped down. A total reset at the top. Absolutely.
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  And if you thought the boardroom was chaotic, just look at the timing in the finance department.
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  What happened there? The company's chief financial officer, the CFO,
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  ceased employment abruptly on June 25th, 2025.
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  June 25th. That's like five days before the end of the reporting period we're discussing.
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  Exactly. It's like the financial pilot ejecting just minutes before trying to
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  land the half-year results.
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  Underscores the instability. When did they get a new CFO? They only managed
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  to appoint a new one on September 28th.
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  Right around the time the settlement was happening. So for that whole critical
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  period of reporting and shareholder battles, there was serious turbulence in
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  the finance leadership, too.
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  So who took over after the resignations? Who's in charge now?
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  A new leadership team came in as part of the resolution.
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  Dr. Danny Obengtek was appointed as an executive director.
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  And eventually, Mr. Tan Chong Huat was re-designated as the non-executive independent chairman.
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  So they take the reins of a company that's, on paper, losing a lot of money from operations.
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  Right, bleeding operationally. But is actually sitting on a decent pile of cash,
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  thanks to that January placement, and has just gone through this incredibly
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  disruptive, but maybe cleansing governance fight. That's the transition.
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  MIL is pivoting dramatically. They've moved from that period of, you know,
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  severe operational losses driven by FX and market pressures,
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  which were masked by the equity placement into a completely new phase,
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  a phase defined by new leadership installed effectively via a successful,
• 15:00
  legally validated shareholder action that emphasized governance compliance.
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  So summarizing for the listener, two main threads here.
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  First, severe operational losses driven by macro pressures like FX,
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  but masked financially by that big equity placement in January. Right.
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  Second, overlaid on all of that, this complex and ultimately successful shareholder
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  revolt rooted in governance concerns, leading to a complete boardroom reset
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  right after the reporting period.
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  Yeah, the key takeaway for you, the learner, is that MIL now has cash and has
• 15:32
  a clean slate at the top, having resolved that immediate governance uncertainty.
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  That's the positive. Well, what are the liabilities or risks?
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  Well, they still have those underlying operational challenges.
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  That big inventory buildup absolutely has to translate into profitable sales
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  in the second half of 2025.
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  Plus, they've flagged those higher costs coming due to the settlement agreement.
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  So they're capitalized, but the operational questions are huge and there are
• 15:56
  cleanup costs from the fight.
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  Which brings us to the final sort of provocative thought, building on how they
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  plan to use the rest of that placement money. Okay, tell us.
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  Right, remember they raised S3.9 million net from the placement back in January.
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  As of the report date, they'd only used about S1.6 million dollars of it.
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  Mostly for working capital, covering those operational losses,
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  and funding some of those cost-saving sourcing efforts we talked about.
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  Okay, so quite a bit left over. Yeah, around $2.3 million.
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  And crucially, zero funds, absolutely nothing had been allocated yet to the
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  two strategic areas they originally earmarked the money for.
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  Yeah. Market expansion and potential new business.
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  Interesting. So the strategic growth plans were on hold while all this other
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  stuff was happening? Seems like it.
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  So here's the question for this new leadership team inheriting this situation.
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  Given the severity of the recent operational losses and the court's clear emphasis
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  on proper governance and compliance, what's the immediate priority?
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  What are the options? Do they focus defensively, aggressively cut costs,
• 17:02
  manage that FX risk better, try to prevent further operational bleeding, or do they go on offense?
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  Do they swiftly deploy that remaining S2.3 million dollars in strategic funds
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  to try and finally ignite the revenue growth they desperately need,
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  maybe through that market expansion or finding a new business line.
• 17:19
  Defense versus offense, with limited resources and a first start. Exactly.
• 17:23
  That choice, how they prioritize using that remaining cash in the face of ongoing
• 17:28
  operational headwinds, will likely define their performance in the next reporting
• 17:31
  period and tell us a lot about the new board strategy.