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Revenue Crisis For Miyoshi Limited In FY2025 · Investor Exchange

• 0:02
  Time for another Investor Exchange Podcast. Here are your hosts, Matt and Sally.
• 0:08
  Welcome back to The Deep Dive. This is where we take those, you know,
• 0:10
  really dense corporate filings and break them down into what you actually need to know.
• 0:14
  Today, we're digging into Miyoshi Limited. We've got their unaudited financial
• 0:18
  statements for the full year ending August 30, 2025. We'll just call it FY 2025.
• 0:24
  And our mission today, it's not just reading out numbers. We want to get behind
• 0:28
  them, find the real story. What drove the performance?
• 0:31
  Where were the bright spots or maybe not so bright spots? And crucially,
• 0:34
  what's the outlook, especially thinking about their cash situation?
• 0:38
  Yeah. And right off the bat, the bottom line gives us this interesting starting point.
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  The group reported a net loss again for FY 2025 coming in at $3.352 million.
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  But here's the twist. That loss
• 0:50
  actually narrowed a little bit compared to last year's $3.425 million.
• 0:55
  It's about a 2.13% decrease in the loss. OK, let's unpack that straight away
• 0:59
  because, you know, your first thought might be, OK, things are stabilizing.
• 1:02
  But, Miyoshi, they're in Integrated Engineering Services, IES.
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  Usually for a company like that, stabilization means more sales, right?
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  Gaining ground, not just cutting costs. So if the loss got smaller,
• 1:14
  what on earth happened with revenue? The top line.
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  That's exactly where that stabilization idea kind of falls apart.
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  Operationally, things got squeezed. Actually, quite badly. Revenue for FY 2025,
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  it dropped by a pretty staggering 16.91%. went from about $39.6 million down to $32.9 million.
• 1:33
  That's what, nearly a $6.7 million hole in sales in just one year.
• 1:37
  Wow, 16, nearly 17%. That's not just a bit of softness. It sounds like a really
• 1:41
  widespread issue. Yoshi has those three main IES segments.
• 1:45
  Can we break down where that $6.7 million drop actually hit hardest?
• 1:48
  Yeah, we can. And unfortunately, the weakness was, well, it was pretty much
• 1:51
  everywhere, seems tied to some ongoing friction in key regions.
• 1:55
  So, starting with their automotive business. Revenue there fell 14.67%.
• 2:00
  That's a drop of about $2.8 million.
• 2:03
  Management points to weaker demand, fewer sales orders, specifically calling
• 2:07
  out China and the Philippines. And those are, you know, historically big areas for them.
• 2:12
  Yeah. Having two major markets like that drag down a core segment,
• 2:16
  that's definitely a concern.
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  Was it just automotive or did consumer electronics see the same pattern?
• 2:21
  Consumer electronics, almost the exact same story, unfortunately.
• 2:24
  Down 15.20%, which shaved off another $2.7 million or so.
• 2:28
  And again, the reason given, weaker demand, lower orders, linked straight back
• 2:32
  to China and the Philippines.
• 2:33
  It kind of suggests their customers there are really pulling back or maybe finding other suppliers.
• 2:38
  Okay, so two big segments shrinking around 15% because of market weakness.
• 2:42
  That's tough. But I think the
• 2:44
  number that really jumped out at me from the report was in data storage.
• 2:47
  Oh, absolutely. Data storage had the most dramatic fall.
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  It plunged almost 60%, 59.19% to be exact, which was about $0.87 million.
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  But what's really key here, and maybe more worrying, is why.
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  They specifically said it was due to discontinued orders from China customers
• 3:05
  who switched suppliers.
• 3:07
  Right. And that distinction is so important, isn't it? Like soft demand from
• 3:11
  a downturn, maybe that business comes back eventually, but losing customers
• 3:14
  because they've gone elsewhere permanently.
• 3:17
  That revenue might just be gone for good. Replacing big customers is incredibly hard.
• 3:21
  It points to maybe a more permanent structural loss there.
• 3:25
  It really does. And it highlights why just looking at the slightly smaller net
• 3:29
  loss doesn't tell the whole story. You've got this sharp revenue decline everywhere,
• 3:32
  plus this structural hit in data storage. So the big question becomes.
• 3:36
  How do they do it? How, when you lose almost 17% of your sales and some key
• 3:40
  customers, do you actually manage to shrink the net loss, even by just 2%?
• 3:44
  Right. They must have been absolutely ruthless on costs, I imagine.
• 3:47
  But I suspect even that wouldn't be enough on its own to cover a $6.7 million
• 3:51
  revenue gap. There has to be something else. You'd basically hit the two main points.
• 3:55
  First, yes, cost discipline was definitely a factor. They cut raw material costs
• 3:59
  by over 20%, which is actually a bit more than the revenue drop,
• 4:03
  so that suggests they were pretty efficient in matching production costs to lower volumes. Second,
• 4:09
  And this is probably the tougher part. They did some major restructuring.
• 4:12
  Employee benefits costs look stable for the whole year.
• 4:15
  But if you dig into the notes, it shows a significant headcount reduction in
• 4:19
  Malaysia after they stopped operations there.
• 4:22
  And also lower salary costs because of workforce cuts in their China operations, too.
• 4:27
  Ah, okay. So they're cutting deep into their fixed costs, laying people off.
• 4:31
  Painful decisions, obviously, but aimed at improving margins down the line,
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  still even with those cuts.
• 4:37
  Closing that gap when revenue falls that much usually needs a big injection
• 4:40
  of cash from somewhere else, something non-operational.
• 4:43
  It really sounds like they needed a one-off boost. Which takes us to other income, I guess.
• 4:48
  Exactly. That's the missing piece. Other income surged.
• 4:52
  It went up by over 60%, hitting $2.007 million for the year.
• 4:56
  And the crucial thing, the bit everyone needs to understand,
• 5:00
  is where most of that came from. The single biggest item.
• 5:03
  A $1.61 million gain on disposal and remeasurement of assets held for sale.
• 5:09
  There it is. That's the key takeaway, isn't it? That $1.6 million,
• 5:13
  the bulk of their other income, it's not profit from making and selling things.
• 5:17
  It's from selling off assets.
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  Property, equipment, whatever. they basically plugged the hole from their operating
• 5:23
  losses by selling stuff.
• 5:25
  It completely changes the picture, doesn't it? The core business making and
• 5:28
  selling engineering services was losing money.
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  They just papered over some of that loss temporarily by liquidating assets.
• 5:35
  You take away that $1.6 million one-off gain, and the net loss would have actually
• 5:39
  gotten substantially worse year on year.
• 5:41
  Yeah. It really shows the pressure they're under operationally.
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  Let's link this to cash flow then, because cash tells a real story.
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  Net cash used in operating activities was $0.92 million. So,
• 5:50
  yeah, operations burn through cash. But then look at investing activities.
• 5:54
  Cash generated from investing was a healthy $3.53 million.
• 5:58
  And where did that come from? Not from making widgets. It was almost entirely
• 6:02
  that $4.02 million in proceeds from selling assets held for sale,
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  plus another $0.65 million from disposing of plant and equipment.
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  So the numbers absolutely confirm it. Their cash balance went up by about $2 million overall.
• 6:17
  But that increase was really driven by selling assets, not by profits from the
• 6:21
  core business. It feels like a survival tactic.
• 6:24
  And it raises that critical question for you, the listener.
• 6:27
  How much more do they have left to sell? This isn't a sustainable strategy forever.
• 6:31
  We even see it continuing.
• 6:32
  After the year end in October 2025, they completed selling land in a factory
• 6:36
  in Malaysia. That brought in another, what, $1.8 million roughly?
• 6:40
  They're clearly still relying on this to manage their cash. Right.
• 6:43
  And speaking of cash and liquidity, we absolutely need to look at the balance
• 6:46
  sheet, especially the debt side.
• 6:48
  These asset sales suggest they really need to hold on to cash.
• 6:51
  And this is probably the biggest immediate hurdle they're facing.
• 6:55
  If you look at current liabilities, that's money due.
• 6:58
  Within the next year, they increase quite a bit by $3.1 million up to $16.5 million.
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  But why they increased is the really important part. It wasn't mostly from new
• 7:07
  suppliers or anything operational.
• 7:09
  It was largely because $3.73 million in bank loans from their Philippine subsidiaries got moved.
• 7:16
  They were reclassified from long-term non-current debt to short-term current debt.
• 7:21
  Ah, okay. So for anyone less familiar with the jargon, non-current means it's due way down the road.
• 7:27
  Reclassifying it to current means that $3.7 million loan is now due for repayment
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  within this financial year, FY 2026.
• 7:34
  Precisely. That suddenly brings a big payment obligation much closer.
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  That's a significant liquidity challenge, especially for a company that's losing
• 7:40
  cash from operations and selling assets just to stay afloat.
• 7:44
  Finding $3.7 million in the next 12 months It's going to be tough.
• 7:47
  And that looming deadline, that $3.7 million payment, it completely explains
• 7:52
  why the board was so cautious, doesn't it?
• 7:55
  They declared no dividend for FY2025. They explicitly said it was to conserve
• 8:00
  cash because of the tough environment and, presumably, this big debt payment
• 8:04
  coming up. Absolutely. That link is crystal clear.
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  When a company facing operational headwinds and a big debt maturity suddenly
• 8:11
  cuts its dividend, it's basically signaling that every single dollar is needed
• 8:15
  just to manage liabilities and keep the lights on.
• 8:18
  And inevitably, another year of losses hit the shareholder's value.
• 8:21
  The net asset value per share dropped from 2.23 cents down to 2.0 cents.
• 8:27
  That's mainly because of the $3.2 million loss attributable to the owners this year.
• 8:32
  The company's net worth is still eroding, even with those asset sales propping things up.
• 8:36
  Yeah, and management seems fully aware of the situation.
• 8:39
  Their outlook statement heading into the next 12 months is, well,
• 8:41
  it's very conservative. They're not promising any quick fixes.
• 8:44
  No, definitely not. They maintain a really cautious stance. They list a whole
• 8:48
  bunch of external factors, things they can't really control that are going to
• 8:52
  keep making life difficult.
• 8:53
  What were those specific headwinds they mentioned? Pretty much the whole list
• 8:57
  of current global worries, the uncertain global economy in general, U.S.
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  Tariffs causing trade issues, the wars in Ukraine and the Middle East creating
• 9:05
  instability and just generally rising operating costs.
• 9:08
  They're basically saying, don't expect the outside world to give us a break anytime soon.
• 9:13
  The same pressures that caused that 17 percent revenue drop,
• 9:15
  they expect them to continue.
• 9:17
  Okay, so given that rather bleak external picture and that big $3.7 million
• 9:22
  debt payment hanging over them, what's their game plan? What's the strategy?
• 9:26
  Pretty defensive, as you expect. It's basically two things. One,
• 9:29
  try to manage the core IES business better, maybe win back some orders,
• 9:34
  find new customers, stabilize things there.
• 9:36
  And two, keep hammering away at cost discipline through better operational efficiency.
• 9:42
  Trying to squeeze more out of less. The massive challenge, though,
• 9:45
  is that last year, narrowing the loss relied heavily on those one-off asset
• 9:49
  sales, not just operational tweaks.
• 9:51
  If demand stays weak, especially in China and the Philippines,
• 9:54
  can cost discipline alone generate enough cash to pay back that $3.7 million
• 9:58
  alone? Well, that's going to be incredibly difficult.
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  So let's quickly summarize this deep dive then. FY 2025 for Miyoshi,
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  defined by really sharp drops in revenue across the board, weak demand,
• 10:08
  lost custodians in key areas.
• 10:09
  They did managed to slightly narrow the net loss, but only through some pretty
• 10:14
  aggressive cost cutting, including significant job losses.
• 10:17
  And critically, thanks to those big one-time gains from selling assets,
• 10:21
  they essentially bought themselves some breathing room, but the core business shrank.
• 10:24
  Exactly. And that breathing room might be running out. They're heading into
• 10:27
  FY2026, facing all those same global economic headwinds, continued weak demand
• 10:33
  where it matters most for them, and crucially, that $3.73 million debt payment
• 10:37
  that's now due this year.
• 10:39
  So the question really for you, the listener, is this. We know last year's relative
• 10:43
  stability came from selling things off.
• 10:45
  Can they now actually generate enough cash purely from operations facing weak
• 10:49
  demand and global uncertainty to handle that big debt payment coming due in
• 10:53
  FY2026, or will they need to sell even more?
• 10:56
  That debt maturity really feels like the make or break test for their turnaround
• 11:00
  efforts. It's definitely the key thing to watch in their future reports.
• 11:03
  Okay, that's all we have time for on this deep dive.
• 11:11
  We'll be right back.