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United Food Holdings Limited: Q1 2026 Financial Results & Delisting Update · 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 the Deep Dive. Today, we're cracking open a set of financial
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  results, and these ones, well, they feel a bit like a riddle wrapped in a balance
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  sheet at first glance. You certainly do.
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  We're diving into the 1QFY 2026 financials for United Food Holdings Limited.
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  They're incorporated in Bermuda, but mostly operate in China,
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  food products, additives, animal feed, that sort of thing.
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  We've got their latest condensed interim statements for the three months ending
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  June 30, 2025. Right. The Q1 numbers.
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  Exactly. So our mission, as always, is to unpack these numbers,
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  figure out what they're really telling us about the company's health,
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  pinpoint why some of these, frankly, dramatic shifts are happening and get a
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  clearer picture for you listening.
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  Yeah. What's the story behind the numbers? We'll hit everything,
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  revenue, expenses, even some pretty direct concerns from board members.
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  So kicking off, what immediately jumps out at you from these documents?
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  Well, the first thing you see, and it is fascinating, maybe a bit paradoxical,
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  is the headline number, a huge reduction in losses.
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  For that quarter, 1QFY 2026, they reported a total loss of just over RMB 1 million.
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  That's Chinese yuan, of course. Now compare that to the same time last year,
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  1QFY 2025, where the loss was RMB 8.4 million.
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  So that's an 88.1% improvement.
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  Huge drop. 58%. Yeah, and it's across the board.
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  Continuing operations lost down 94%. Discontinued operations lost down 75%.
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  Looks great on the surface.
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  Okay, and an 88% cut in losses sounds fantastic. That's usually cause for celebration,
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  right? A big turnaround signal.
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  But then you dig a tiny bit deeper and the company recorded zero revenue.
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  Zilch. From continuing operations. both this quarter and the same quarter last year. Correct.
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  Zero revenue. And even for the discontinued bits, revenue dropped from,
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  what, 0.3 million RMB to zero this quarter.
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  So how on earth do you slash losses by almost 90% when you have literally no sales coming in?
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  What does this improvement actually mean? You've hit the nail on the head.
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  That's the core paradox and why these results are so, well, interesting and maybe concerning.
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  The statements literally say gross profit was not applicable because,
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  you know, no revenue, no cost of sales for continuing ops.
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  So this isn't about the business suddenly booming.
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  Not at all. So it's not like they found a magic bullet for sale. No.
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  This signals a company in, frankly, pretty severe distress.
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  They're surviving by shedding parts of the business, clearing old liabilities.
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  The loss reduction. It's almost entirely driven by cutting expenses to the bone
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  and also not having some big charges they had last year.
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  Okay. So it's cost cutting and maybe some accounting quirks from last year not repeating.
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  Let's dig into that. Where did the expense cuts actually come from?
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  Right. Let's break it down. The documents are pretty clear here.
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  Three main areas stand out. First, administrative expenses.
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  These plummeted, down nearly 80%, 79.4% to be exact.
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  Went from R&B 1.8 million last year to only R&B 373,000 this quarter. Wow.
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  They say specifically it's lower salary costs and lower rent.
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  So could be layoffs, maybe renegotiated leases, maybe just stopping activities altogether.
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  Big cuts to overhead, basically. Okay, admin costs slashed. What else?
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  Second, other expenses. Net.
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  This category dropped even more dramatically. I mean, it practically vanished.
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  From RMB 4.1 million last year down to just RMB 7,000. 7,000. From over 4 million.
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  Yep. And the reason given is mainly lower penalty payments compared to last year.
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  So it suggests there was a big, maybe one-off penalty paid in 1QFY 2025 that
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  just didn't happen again this year.
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  Boosts the bottom line, but doesn't mean the core business is any healthier.
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  Right. Makes the comparison look good, but doesn't reflect current operations.
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  And the third area. That's the discontinued operations. The loss from those
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  also shrank significantly.
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  And again, it's mainly because of something that didn't happen this year.
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  Ah, another non-repeat item. Exactly. They mentioned an inventory impairment
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  charge they took in 1QFY 2025, basically writing down the value of stock.
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  That didn't happen this quarter, so the loss looks much smaller.
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  So a lot of this improvement is cutting costs drastically and not repeating
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  big hits from the previous year.
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  What about that decision, though, to label whole businesses as discontinued?
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  That seems like a major move.
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  It is. It's a really crucial point. It tells you a lot about where they see
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  things going, which seems to be, well, shrinking.
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  Which businesses are these? They decided to sell off their entire stakes in three companies.
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  Chengde Perun Shengwu Ziao, or CDPR, Hebei Shengrun Shengwu Kechigufin,
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  HBXR, and Benchmark Trade Limited, BM.
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  Okay. These are their additives business and the animal feed and traditional medicine segments.
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  As of the end of March 2025, they slapped the discontinued operations label
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  on them because they intend to sell.
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  So taking the results out of the main picture. Exactly. It cleans up the income
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  statement in a way, removes those ongoing losses. But this whole disposal process,
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  it's tied into other problems on the balance sheet and governance issues, too.
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  It's basically admitting these parts aren't working or aren't core anymore.
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  Right. And speaking of the balance sheet.
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  Cash flow, that often tells a more immediate story, doesn't it?
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  The loss figures improved, but the cash situation looks less rosy.
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  Yeah, that's a big contrast.
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  In Q1 this year, they had a net decrease in cash of RMB 35,000.
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  Last year, same period, they had a net increase of almost RMB 3.9 million.
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  What happened to the cash? Well, this is where you see the real immediate pressure.
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  Okay, so cash used in operating activities did get better. They burned through
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  less cash day-to-day, about RMB 278,000 used this quarter, versus over RMB 2.1 million last year.
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  Still burning cash, though. It's negative, yeah. But the big hit is investing activities.
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  They generated zero cash from investing this quarter. Nothing.
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  And last year. Last year, they pulled in nearly RMB 5 million from investing.
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  That was cash from selling a subsidiary and getting a deposit back on a deal
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  that didn't happen. That source of cash.
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  Completely dry this quarter. Ouch. And financing activities didn't help much either.
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  They got a much smaller advance from a shareholder, only RMB 243,000 this time,
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  compared to almost a million last year.
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  So less cash coming in from shareholders, too. Exactly. And this ties directly
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  into a really critical point made by one of the board members, Prof.
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  Ling, in the notes provided. What did he say? He specifically warned that because
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  they don't have a 12-month cash flow forecast, there are serious going concern
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  risks. Going concern. Yeah.
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  That means doubts about whether they can even stay in business. Right, precisely.
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  Serious doubts about surviving the next 12 months. He thinks this lack of foresight
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  hinders their ability to meet debt payments. He even put a number on it.
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  Estimates they need at least SGD $1.5 to $2.00 million in cash coming in over
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  the next year just to meet their listing requirements. And are they meeting current obligations?
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  Well, that's another red flag. He points out there are overdue payables,
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  including staff salaries and professional fees. That signals immediate, real financial strain.
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  Liquidity is clearly a huge issue. Wow.
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  Okay, so it's not just about the numbers on the income statement.
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  There seem to be deeper structural problems. You mentioned the statements weren't audited or reviewed.
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  That's right. These Q1 numbers are unaudited. And that's particularly concerning
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  when you look back. Why is that?
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  Because for the full year FY 2023, the auditors issued a disclaimer of opinion. A disclaimer.
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  It's about as bad as it gets from an auditor.
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  It doesn't mean the financials are wrong, necessarily. It means the auditors
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  couldn't get enough evidence to even form an opinion.
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  They couldn't verify bank balances, couldn't get confirmations,
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  huge gaps in what they could confirm.
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  So they basically threw up their hands. Pretty much. Now, management says they
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  did things, notarized declarations, moved accounts to a big state-owned bank,
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  got KPMG to do a special audit.
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  But those underlying issues from FY2023 unresolved cast a really long shadow
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  over these current unaudited numbers.
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  Understandably. Any other audit issues? Yeah. Related to those companies,
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  they're now selling off HBXR, CDPR, BM.
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  The auditors back then couldn't verify a fair value gain related to their acquisition. Why not?
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  Because the sellers hadn't met a profit warranty, partly blamed on COVID.
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  And this failure is directly linked to the decision now to dispose of them.
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  Kind of raises questions about that whole acquisition in the first place.
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  Right. It all seems connected.
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  So zero revenue, cash crunch, audit disclaimer.
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  What about money owed to the company? Are they collecting what they're due because
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  they desperately need that cash?
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  Well, that's another major headache for them. Big problems on the receivables front.
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  First, there's a chunk of RMB, $42.9 million, owed by a company called Kang Weijin, or KWJ.
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  It's for specialized equipment sales. The company just says they're making their best effort to collect.
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  Best effort doesn't sound too confident. It often doesn't know,
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  suggests it's tough going.
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  But the really big one is RMB, $82 million in deposits and loan receivables
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  from another company, Shenzhen Share Home Technology, SST.
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  $82 million. What's the story there? They were potentially going to acquire
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  SST, but the deal fell through because SST's valuation dropped.
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  United Food Holdings has taken legal action, sent demand letters.
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  And it responds. None reported. And here's the kicker. They've made a full provision
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  for the entire RMB, $82 million.
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  A full provision, meaning? Meaning they've basically written it off.
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  They don't expect to get any of it back.
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  It's a massive hit to their assets, effectively acknowledging that money is
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  gone. A huge failed investment or loan. Wow.
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  Okay. So massive write-offs on top of everything else.
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  And then the really big news hanging over all of this, the delisting notice. Yes.
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  That's the elephant in the room, really.
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  On August 14th, 2024, they got a notification from the Singapore Exchange,
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  the SGXST, that they're being delisted, kicked off the exchange.
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  What does that mean practically for the company and shareholders? It's critical.
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  Under the listing rules, the company or its controlling shareholder now has
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  to make a fair and reasonable exit offer to buy out the remaining shareholders.
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  So forcing shareholders to sell back their share. Essentially, yes.
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  They have to make an offer. They're currently working with lawyers and appointing
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  an independent financial advisor, an IFA, to figure out the terms of that offer.
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  But for shareholders, it means losing the public market, losing liquidity.
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  They'll likely be forced to accept an offer or be left holding shares in a private,
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  delisted company. Not a great position to be in.
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  Definitely not. And this ties back to Profiling's strong objections again.
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  What's his issue with the exit offer process?
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  He thinks they're dragging their feet. He believes waiting until potentially
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  September 2025 to announce the IFA appointment and the offer terms is unacceptable.
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  He urged them to do it immediately. And this is why he'd vote against the results.
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  That's a major part of it, yes.
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  His dissent is incredibly strong.
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  Voting against your own company's financials as a board member,
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  that's a massive red flag about his confidence in the numbers and the process.
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  It really is. You mentioned another board member, Mr. Chang,
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  also had concerns. What specifically were they worried about leading to this
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  kind of open opposition?
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  Their concerns paint a picture of a near total breakdown in basic corporate governance.
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  It's quite alarming. Okay, lay it out for us. So Proffling's issues beyond the
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  cash flow and liquidity problems we talked about, he highlighted the lack of
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  an external internal auditor, or IA.
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  Why is that important? An IA is crucial for checking internal controls risk
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  management. Without one, especially after past control weaknesses were flagged
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  by KPMG and the previous auditors, he's worried about the accuracy of the financials.
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  He also explicitly backs suing RTTL and SST to get that money back.
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  And he's unclear about the plan for selling HBXR original vendors or new buyers.
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  He wants an EGM, a shareholder meeting, to approve it. So fundamental control
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  and transparency issues.
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  And Mr. Chang. Mr. Chang's points are, if anything, even more stark about the
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  governance vacuum. He flat out states, the company currently has no appointed
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  auditor. The previous one's term expired.
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  No auditor at all. Apparently not appointed yet. Also, no internal auditor, as Profling noted.
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  And he adds, no access to legal counsel for the board and no company secretary appointed.
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  Wait, no auditor, no IA, no lawyer, no company secretary. How can they even function?
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  That's precisely his point. He says without these basic structures,
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  he and Profling are hamstrung.
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  They can't get independent professional advice on anything.
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  Including these financial results. It's like trying to fly a plane with no instruments
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  and no co-pilot, just fundamental pieces missing.
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  Wow. That is a stunning lack of basic governance.
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  Given all of that, the zero revenue, the cash burn, the audit disclaimer.
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  The write-offs, the delisting, the internal chaos, I guess it's no surprise
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  there's no dividend for shareholders.
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  Absolutely no surprise. Predictable, really. They explicitly state no dividend
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  declared or recommended. The reason. Yeah.
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  They're in an accumulated loss position, and any cash they do have is needed
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  just for working capital.
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  Basic survival. So let's try and sum this all up. United Food Holdings Q1 results
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  show this really complex, kind of contradictory picture.
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  Headline last reduction looks amazing, down 88%. But it's built on sand, really.
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  It's driven by slashing costs, admin, other expenses, and not repeating big
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  one-off charges from last year like penalties or inventory write-downs.
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  It's not driven by revenue.
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  Because there isn't any from continuing operations. Exactly. Zero.
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  So the takeaway isn't recovery. It's deconstruction, maybe.
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  You've got the zero revenue, the huge uncollected receivables written off,
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  serious cash flow and liquidity worries, overdue bills.
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  And the massive governance problems, the past audit disclaimer,
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  and now apparently no auditor, no IA, no legal counsel, no secretary,
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  board members openly dissenting. Right.
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  It's a challenging landscape, doesn't even begin to cover it.
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  And then the delisting notice from the SGX adds this whole other layer of uncertainty,
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  especially for shareholders facing a mandatory exit offer.
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  This deep dive really peeled back the layers, didn't it?
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  It shows a company in this state of drastic, maybe desperate transition,
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  trying to sell off parts, grappling with just fundamental operational and governance
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  failings, all while being shown the door by the stock exchange.
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  It's a stark reminder, isn't it? You always have to look past that headline number.
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  That 88% loss reduction hides a much, much tougher story. It really makes you
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  wonder, what's the real story behind the headline numbers for other companies you might be looking at?
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  And it leaves us with a big question.
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  What future can there be for a company being delisted, facing legal battles
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  for cash it likely won't recover, writing off huge assets, and with such profound
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  internal governance issues that its own directors are sounding the alarm?
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  It definitely gives you, the listener, a lot to think about regarding transparency,
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  viability, and just how crucial it is to dig deeper than the circuit.