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Miyoshi Limited HY2025 Financial Results · Investor Exchange

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  Music.
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  Today, we're taking a focused look at Miyoshi Limited. Yeah,
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  they just put out their unaudited results for the first half of their financial
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  year, the six months ending February 2025.
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  Exactly. And we know these reports can be, well, pretty dense.
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  Financial statements, notes, commentary.
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  Right. So our goal here is to cut through all that and pull out the really key
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  stuff for you, give you a quick handle on their financial health and,
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  you know, what they're seeing coming up.
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  So think of this as your mission briefing, if you will.
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  We want to understand Miyoshi's performance in this first half,
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  why things went the way they did, and what the company is forecasting.
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  And we promise to unpack it all, make it clear, maybe even a little interesting.
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  No dense financial jargon if we can help it. Okay, let's jump right in then. The big picture first.
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  What are the headline figures telling us? Well, the top line,
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  revenue, came in at $17.08 million for this half.
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  Okay, $17.08 million. And how does that stack up against last year?
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  That's where you see the first significant change.
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  Last year, same period, they did $19.77 million.
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  So that's a drop of about 13.6%. 13.6% down on revenue. Yeah. Okay.
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  And did that impact the bottom line, their profitability? Oh,
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  absolutely. And quite dramatically, actually.
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  They went from a loss last year to, well, an even bigger loss this year.
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  Bigger loss. How much are we talking? The loss after tax for this half was $1.95 million.
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  Compare that to $1.06 million loss in the first half of last year.
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  Wow. Okay. So that's, doing the math quickly, almost an 84% increase in the
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  loss. That's substantial.
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  It really is. It shows things got considerably tougher for them financially
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  in this period. And I assume that reflects in the loss per share figures too.
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  Yep, exactly. Both the basic and diluted loss per share increased.
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  Went from negative 0.13 cents last year to negative 0.15 cents this year. Right.
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  So a tougher start to their financial year across the board.
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  Let's dig into that revenue number a bit more. Where did that 13.6 percent drop come from?
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  The report breaks it down by business segments, right? It does.
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  And the automotive segment seems to be a major factor. Revenue there dropped by nearly 23 percent.
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  23 percent. That's quite a fall. What happened there? They point to weaker demand,
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  specifically in the Philippines and China.
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  That segment went from about $10.7 million down to $8.3 million.
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  Okay, Philippines and China for automotive. What about other segments?
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  Well, data storage saw an even steeper decline, percentage-wise.
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  Revenue there fell by, get this, almost 62.5%. 62.5%, wow.
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  Yeah, down from $0.85 million to just $0.32 million.
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  Again, the reason cited was weaker demand in China for those products.
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  So China seems to be a recurring theme in these weaker segments.
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  Was there anything positive on the segment front?
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  Interestingly, yes. The consumer electronics segment actually went the other way.
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  It saw a modest increase of about 4.5%. Oh, okay. So a bit of resilience there.
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  Yeah, up from around $7.5 million to $7.8 million.
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  And the others category, which is mostly rental income, had a smaller dip down
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  about 11%. So a real mixed bag, automotive and data storage pulling things down
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  significantly, but consumer electronics holding up, even growing a bit?
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  Exactly. It highlights how dependent they are on specific market conditions in certain sectors.
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  And you mentioned specific countries like the Philippines and China.
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  Does this geographical breakdown give more color to that? It does.
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  For the Philippines, despite them mentioning weaker automotive demand there,
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  overall revenue actually ticked up slightly from $6.4 million to $6.6 million. Huh.
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  Okay. So maybe other segments compensated. Could be. But China,
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  yeah, that definitely confirms the weakness.
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  Revenue there dropped significantly, from $7.9 million down to $5.3 million.
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  That clearly reflects the issues in automotive and data storage we talked about.
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  Right. And other regions?
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  Thailand saw an increase. Germany saw some growth too. But clearly not enough
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  to offset those major drops, particularly the one in China.
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  Got it. So specific segment and regional weaknesses really driving that overall
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  revenue decline. Now let's switch gears to costs.
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  Why did that revenue drop lead
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  to a much bigger loss? what happened on the expense side. Okay, expenses.
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  Well, some costs did move kind of in line with revenue or materials,
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  consumables, changes in inventory.
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  Those actually decreased by about 15 percent. Which makes sense, right?
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  If you're selling less, particularly in manufacturing heavy segments,
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  your direct costs should fall.
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  Precisely. So there's some alignment there. Yeah. But then you look at other
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  big costs. Like salaries, employee benefits.
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  Yeah. Employee benefit expenses stayed pretty flat, only up about 2 percent.
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  And other operating expenses were also quite stable, just up 1% or so.
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  Okay, so they seem to be holding the line on operational overheads to some extent?
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  It suggests cost management efforts, yeah.
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  But there was one key difference compared to last year that made the profit comparison look worse.
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  Ah, right. Wasn't there something about provisions for bad debts? Exactly.
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  Last year, they had a reversal of loss allowance for impairment of trade receivables.
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  Basically, they'd previously set aside money for potential unpaid customer bills,
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  and last year they decided they didn't need as much set aside, which boosted profit.
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  And that boost didn't happen this year. Correct.
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  That positive swing wasn't there in H-Y 2025.
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  That difference alone accounted for about $0.14 million of the increased loss.
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  Okay, so that's a technical accounting factor, but it definitely impacted the
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  year-on-year comparison.
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  Any good news on the expense side? Well, finance costs were down quite a bit, almost 30% lower.
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  That's a positive, meaning less spent on servicing their debt.
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  Lower interest payments, always helpful.
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  And what about other income? Did anything offset the gloom there? Actually, yes.
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  Other income jumped significantly, up over 62%. Oh, what drove that?
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  Mainly higher foreign exchange gains.
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  So currency movements actually helped them out a bit this period.
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  Right. But clearly not enough to overcome the core business challenges reflected
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  in that lower revenue. No, not nearly enough.
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  The revenue drop and that lack of the impairment reversal were the bigger factors
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  driving the increased loss.
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  Okay, let's briefly touch on the balance sheet.
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  Any major shifts in what Miyoshi owns and owes? Assets and liabilities.
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  Sure. On the assets side, current assets nudged up slightly,
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  mainly because customers owe them a bit more money, trade receivables increased.
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  Okay. And liabilities, what they owe. Current liabilities, so short-term obligations,
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  they increased more significantly.
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  That was mostly due to a higher bank overdraft and owing more to suppliers'.
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  Trade payables, although their short-term bank loans did decrease. Right.
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  And longer term. Non-current assets decreased a bit, mostly just depreciation
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  on their equipment and property.
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  Standard stuff. Non-current liabilities also decreased, mainly lower provisions
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  and deferred taxes, though long-term bank borrowings did tick up slightly.
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  So some moving parts, but maybe nothing completely dramatic on the balance sheet structure itself.
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  Not fundamentally transformative, no. More like adjustments reflecting the current
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  operating environment and financing activities. Speaking of activities, let's look at cash flow.
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  Did the business actually generate cash despite the loss?
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  That's a key question. And interestingly, yes, net cash from operating activities was positive.
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  About $1.62 million generated.
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  So the day-to-day business is still bringing cash in the door? It seems so, yes.
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  Helped by some positive working capital changes, like managing inventory and receivables.
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  Okay, that's a positive sign. But what about other cash movements? Investing?
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  Financing? Well, they spent about half a million, $0.53 million,
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  on investing activities mostly buying property, plant, and equipment.
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  So investing in the business still. Yep. But the big outflow was in financing activities.
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  They used a net $3.19 million there.
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  $3.2 million used in financing? What was that mean? Primarily paying back bank borrowings.
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  Ah, okay. So operating activities generated cash, but they used a chunk for
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  investment and a much bigger chunk to repay debt. Exactly.
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  And the net result of all that was an overall decrease in their cash and cash
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  equivalents during the half year. Got it.
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  So operations are cash positive. But debt repayment is a major use of funds right now.
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  That leads us nicely to the outlook. What's management saying about the next 12 months?
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  They're sounding pretty cautious, very cautious, actually. What are the specific worries?
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  They're pointing to a lot of global economic uncertainty.
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  Things like U.S. tariffs, the ongoing war on Ukraine, the crisis in the Middle
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  East, and just generally rising operating costs.
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  They see these as significant headwinds. So they're not expecting smooth sailing ahead. Definitely not.
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  Their outlook seems quite guarded.
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  Anticipating these external pressures will likely continue to impact the business.
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  Okay, so given that cautious outlook, what's their stated strategy?
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  How do they plan to navigate this? It sounds like they're focusing inwards on what they can control.
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  Yeah. They mentioned strengthening their core business, the Integrated Engineering
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  Services, or IES, and really doubling down on cost discipline and operational efficiency.
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  Right. Control the controllables, essentially. Pretty much. And that cautious
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  approach also showed up in their dividend decision, didn't it? Ah, yes.
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  They decided not to declare an interim dividend for this half year. Correct.
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  The board stated they want to conserve cash because of this challenging business
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  environment, keeping their powder dry, so to speak.
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  Makes sense in light of the uncertainties they flagged.
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  Did the report mention anything else significant, maybe looking further out?
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  There was one subsequent event noted, something that happened after this reporting
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  period ended in February. Oh, what was that?
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  In March 2025, they apparently reached an agreement to buy the remaining 20%
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  stake in their Thai subsidiary, Miyoshi Hitek.
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  So taking full ownership of the Thailand operation.
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  Seems like it. So even with the headwinds, they're still making some strategic
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  moves to consolidate parts of the business. Interesting. OK,
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  so let's try and wrap this up.
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  Key takeaways from this deep dive into Miyoshi's half-year results.
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  Well, clearly revenue was down and the loss significantly increased compared to last year.
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  Driven mainly by weakness in automotive and data storage, especially linked
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  to demand issues in China and the Philippines. Right.
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  While they managed some costs and got a boost from Forex gains,
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  it wasn't enough to offset that top line pressure and the absence of that impairment
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  reversal from last year.
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  Cash flow from operations was positive, which is good, but overall cash decreased
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  due to investments and, importantly, significant debt repayments.
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  And looking ahead, management is very cautious due to global economic uncertainty,
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  focusing on core operations and cost control, and conserving cash by skipping the dividend for now.
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  So you should now have a pretty solid grasp of Miyoshi's recent performance
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  and their current perspective, all drawn directly from their own report. Exactly.
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  It paints a picture of a company navigating some pretty choppy waters right
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  now. Which leads to a final thought to leave you with.
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  Considering those global headwinds and the specific challenges in their key
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  segments, like automotive and China, what kind of strategic moves,
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  beyond just cost control, might Miyoshi really need to make over the next year
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  or so to get back on a path to profitability?
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  Yeah, that's the big question, isn't it? How do they reposition or adapt in
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  the face of these persistent challenges? Something to mull over. Indeed.
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  Well, that's all the time we have for this deep dive. Thanks for joining us.
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  We hope you found it useful.
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  Join us again next time for another look into the source materials make.
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  Music.