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Goodland Group: Half-Year 2025 Net Loss Guidance · Investor Exchange

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Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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Welcome to the Deep Dive. Today, we're taking a close look at Goodland Group Limited, or GGL.
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Yep. We've got two key documents in front of us. They're profit guidance from May 9th, 2025.
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Which gave us a heads up. Exactly. And then the full unaudited half-year results
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they announced on May 15th covers the period ending March 31st this year.
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Okay, and our goal here is, well, to cut through the jargon right,
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get straight to what matters for understanding GGL now. Precisely.
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We'll unpack the financials for that first half, try to figure out why the numbers
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are what they are. And see what the company's saying about what's next.
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These reports, you know, they're more than just numbers. They give you a snapshot
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of operations, strategy, challenges.
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So we'll pull out the important stuff, the surprises, the key takeaways you
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need from these papers. Let's jump in.
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So, headline number. The profit guidance warned us. The results confirmed it.
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GGL reported a net loss for the first six months of their financial year.
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That's right. For the first half of FY 2025, the loss after tax came in at $2.353 million.
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A loss, yeah. Not ideal. But how does that stack up against last year?
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Well, that's where it gets interesting.
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It is a loss, but compared to the same period last year, 1H FY 2024, it's actually better.
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Better. How much better? Back then, the loss after-tax was S$3.531 million.
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So this year's S2.353 million dollar loss means they improved things by 1.178 million dollars. Wow.
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Okay. So a 33% improvement, roughly.
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Still red, but significantly less red. Exactly.
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Narrowed the loss considerably. All right. So that's the big question then, isn't it?
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Headline loss, but improving loss. What drove that change? What happened under
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the hood to cut that loss by over a million dollars?
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Yeah. Let's unpack that. Where do you want to start? Top line.
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Makes sense. Revenue. Did that help? Was it up? It was. Yeah. Yeah, slightly.
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Revenue increased by $2.3 million, which is about 6%. Went from $5.175 million
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last year to $5.467 million this half.
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6%. Okay, not a massive jump. Does the commentary say why it went up?
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It doesn't. It's pretty specific.
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They say it was mainly due to the sale of a development property in the current period.
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Oh, okay. So not necessarily like broad-based growth across the board,
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more like one specific deal closing.
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Seems that way. It suggests that maybe revenue can be a bit lumpy.
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You know, depends when these specific property sales actually finalize. Got it.
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A single property sale helped the top line. How did that impact the costs directly
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related to sales and the gross profit?
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Well, cost of sales went up a little, which you'd expect, right?
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Costs tied to that revenue. But the gross profit, that jumped quite a bit more.
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More than the revenue jump. Oh, yeah.
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Gross profit went from $2.5365 million in 1HFY 2024 up to $6.53 million this
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half. That's a 45% increase.
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Wow. Okay. 45% jump in gross profit from just a 6% revenue rise.
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That tells you something about the profitability of that specific sale,
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doesn't it? Absolutely.
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It boosted their gross profit margins significantly, went from 7% last year
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to 10% this year. And the report says why? Yep.
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Higher selling prices from the sale of development properties sold in 1HFY 2025.
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So they didn't just sell a property, they sold it at a good price relative to
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its cost. Okay, so that specific deal was key for both revenue and margin improvement this period.
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What about other income? Anything else helping out?
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There were a couple of smaller positive contributors. Other operating income,
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it jumped percentage-wise, but off a small base.
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Up by $0.07 million to $0.1 million.
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And where did that come from? The notes say mainly from higher income gained
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from credit landlords in fair value through profit and loss,
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FETPL. and reversal of impairment.
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Also, finance income was up a bit, too. Okay, FVTPL, let's quickly explain that.
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Fair value through profit and loss.
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What does that mean for GGL here? Good point.
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Basically, these are investments, like those credit link notes,
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where any change in their market value hits the profit and loss statement directly
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each period, whether they sold them or not.
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So the value of those notes went up, or they paid out income and that flowed
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straight to the bottom line. Exactly.
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It suggests those specific financial assets performed well during this period.
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Got it. So we've got slightly higher revenue, much better gross margin from
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that one sale, a bit more other income.
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But that S1.178 million dollar improvement in the loss, was that mainly it?
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Or was there a big cost saving somewhere? Ah, now we get to the main event, really. Yeah.
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The single biggest factor driving that reduced loss was finance costs.
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How big a factor? Huge. Finance costs decreased by $70 million. dollars.
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That's a 48 percent drop compared to the same period last year.
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Went from nearly 1.7 million dollars down to about 788 million dollars. Wow, 48 percent.
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That's massive. 788 million dollar reduction just there.
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That accounts for almost, well, almost two-thirds of the total improvement in
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the loss. Pretty much. It was the most significant swing factor.
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And the report tells us why. Which was?
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It says mainly due to lower bank loan interest from development properties,
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as well as from repayment of bank loans during the period.
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Okay, so two things there. They paid back some loans, which obviously cuts interest
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payments, and maybe got better rates on the specific loans tied to development.
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That seems to be the implication.
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Lower interest burden overall. That's critical. Because the property sale,
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that's maybe a one-off boost for this period.
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But lower finance costs...
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Could that be more sustainable? Or does it depend on, you know,
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interest rates staying low or them not borrowing more?
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That's the million-dollar question, isn't it? The report ties it to specific
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repayments and development loans.
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If they need to ramp up borrowing for new projects or if market rates climb.
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Then those costs could easily go back up again.
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Definitely something to watch. Absolutely. Adds a layer of risk if future growth
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needs a lot more debt. Okay.
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Any other big movers on the cost side or income side?
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Admin expenses were pretty flat. stable year-on-year, didn't really move the needle.
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And their associates, investments in other companies? Those actually helped a bit too.
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Their share of results from associates improved by 0.08 million dollars,
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about 16%, up to 0.542 million dollar profit contribution.
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Why the improvement there? Pretty straightforward explanation in the notes.
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Just a better performance from those associated companies compared to the prior
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period. They earned more profit, so GGL's share was higher.
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Okay, let's try and sum up the why for that better loss number.
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It feels like a few things helped, but one thing really dominated.
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That's a good way to put it. The overall improvement, yeah, it came from higher
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gross profit thanks to that well-priced property sale. Better margin there. Right.
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Plus a bit more income from financial assets, finance income,
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better results from associates.
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But overshadowing all that was the huge drop in finance costs.
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That $0.8 million saving from lower interest and loan repayments.
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Exactly. That was the key factor that really pushed the loss down compared to
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last year, offsetting the ongoing admin costs and the remaining interest payments.
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Okay, that gives us a good handle on the profit and loss side.
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But what about the company's actual financial position, the balance sheet,
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comparing March 31st this year to six months earlier, September 2024?
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Any major shifts in assets or liabilities? Oh, definitely.
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And it connects right back to what we're just talking about with property development.
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The most striking change on the asset side is development properties for sale.
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The stuff they're building to sell later. Precisely.
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That line item jumped by $9.7 million in just six months, reached est $226 million total.
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And the reason? They're building more.
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Yep. The report says it reflects development costs incurred on new and ongoing
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projects during the period.
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So they are actively spending money, putting capital into constructing these future assets.
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Okay, significant investment there.
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Any big decreases on the asset side to offset that? A few movements.
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Investment properties dipped slightly, about $75 million.
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Why was that? Mainly currency effects. They mentioned a weaker Malaysia ringgit
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causing a translation loss of investment properties in T-City.
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Ah, the translation loss. So the value in ringgit might be stable,
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but when you convert it back to Singapore dollars for the report,
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it looks lower because the ringgit weakened. Exactly that.
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It's an accounting impact based on exchange rates. Makes sense. What else went down?
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Investments in associates decreased by F1.7 million dollars.
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That was mainly because they received dividends from those associates,
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which gets deducted from the investment value on the books. Okay.
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Cash came in from dividends. Right.
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Also, those financial assets at FETPL we talked about earlier,
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they decreased by S to 1.5 million dollars.
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Why? Because the notes say there was a maturity of credit-linked notes.
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So, those investments finished their term, likely paid out cash.
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Got it. And they sold something else, too.
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Yes. An asset they had classified as held for sale was actually sold during the period.
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So, that S1.2 million dollar asset is now off the books.
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Okay, so assets shifting around. More money going into building properties,
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cash coming in from dividends and maturing investments, one specific asset sold.
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What about the other side of the coin liabilities, particularly debt?
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That's the flip side of the development spending.
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Bank borrowings increased significantly, up by S9.6 million dollars over the
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six months, reaching S100.5 million dollars. And the reason ties back to the building. Directly.
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The report says it was mainly due to net higher drawdowns from banks for the
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ongoing development of property.
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They borrowed more money to fund that construction activity.
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Makes sense. Any other liability changes?
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Trade payables, money owed to suppliers, decreased by S1.8 million dollars.
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They said that was due to making higher payments during the period.
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Okay, so more debt, paying suppliers faster maybe.
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How did all this affect their overall working capital position,
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you know, short-term liquidity?
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Networking capital actually decreased by a mess $6.1 million.
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That reflects the impact of taking on more debt and tying up cash in those development
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properties, offset a bit by cash changes.
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It suggests more of their resources are locked into that ongoing building work.
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Which leads us straight to the cash flow statement.
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The P&L shows profit or loss balance sheet as a snapshot, but cash flow tells
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us where the actual money went.
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How did their core operations fare in terms of cash this half?
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This is a really big contrast to the previous year. In this first half,
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1HFY 2025, GGL actually used S$17.0 million in cash from their operating activities.
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Used $17 million, but didn't they generate cash last year? They did.
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In 1HFY 2024, they generated S$16.0 million from operations.
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So that's a massive swing, from plus $16 million to minus $17 million.
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Whoa, okay, what was burning through all that cash in operations this time?
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The report points primarily to one thing, changes of development property of $12.2 million.
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Ah, there it is again. That's the actual cash going out the door to build those
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properties we saw growing on the balance sheet. Exactly.
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That physical investment consumed a huge chunk of cash. Plus,
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other working capital shifts contributed to the outflow, too.
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So if operations used up a $17 million, how did they plug that hole?
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Where did the cash come from to cover that? Plus things like interest and dividends.
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It came from two main areas, investing and financing activities.
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Investing activities actually brought in cash, about F4.8 million dollar net. How?
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That included the S1.5 million dollars from those matured FVTPL notes,
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the S1.2 million dollars from selling that asset held for sale,
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and S2.2 million dollars in dividends received from associates.
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Okay, so almost $5 million generated from selling things and getting dividends.
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Still leaves a big gap from the S-17 million dollar operating outflow, though.
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It does. And the rest, the biggest piece, came from financing activities.
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Those generated S-6.1 million dollars in cash overall.
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Financing, meaning debt. Primarily, yes. They drew down S-13.7 million dollars
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in new bank loans during the period.
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13 million in new debt? Wow. Yeah.
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Now, some cash went out in financing, too.
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S$4.2 million for repaying other loans. S$1.3 million in actual cash interest paid.
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Right. The P&L showed lower accrued cost, but they still paid cash interest.
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Exactly. And they also paid out S$2.1 million in dividends to their own shareholders during this half.
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But the net effect of all that financing activity was $6.1 million inflow,
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thanks to those big new loan drawdowns. So pulling the cash flow story together,
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they spent heavily on building properties, which burned through cash from operations.
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They offset some of that by selling adjustments and getting dividends.
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But the main way they funded it all was by taking on almost $14 million in new
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bank debt. That sums it up perfectly.
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The balance sheet shows the result, more properties, more debt.
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The P&L shows the improved loss number. And the cash flow shows the activity
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spending on building, funding with borrowing.
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It's all connected. And briefly, did the performance breakdown by business segment reflect this?
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Like property development being key? Yes, it did.
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The segment results provided show the property development segment improved
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significantly, flipping from a loss last year to a profit this year.
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Which lines up with that key property sale driving revenue and profit. Exactly.
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And the property investment segment also saw its loss narrow a bit.
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So the segments mirror the overall group story. Okay, let's pivot to the future then.
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What does GGL say in their outlook section about the market and their plans
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for the next year or so? They give a quick tour of their main markets.
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For Singapore, they see the private housing market still rising in early 2025, but slowing down.
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The price growth eased off quite a bit. And they see that slowdown as good,
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bad. They frame it as potentially supportive.
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Maybe a more stable, less frantic market is better for pricing their projects.
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Okay. What about Malaysia?
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In Malaysia, they're forecasting moderate growth for 2025.
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Driven by local demand, government housing incentives, stable interest rates.
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They specifically call out Penang. Penang, why?
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Seeing strong demand for commercial property there, apparently linked to high-tech
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industries moving in, pushing up values, attracting investors. Interesting.
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And Cambodia. For Cambodia, especially Siem Reap, they sound quite positive,
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mentioning things like easier foreign ownership rules, affordable prices,
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government efforts to booth tourism and investment. And infrastructure helps, too.
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Yeah, they highlighted the new airport near Siem Reap as a factor boosting demand
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and property values across the board there, residential commercial hotels.
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So it's a bit of a mixed picture across the region, slower growth in Singapore,
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maybe some specific bright spots in Malaysia and Cambodia.
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Given all that and the financials we discussed, what's their game plan for the next 12 months?
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Well, they explicitly say they expect ongoing challenges. They flag macroeconomic
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uncertainties and rising input costs, which isn't surprising.
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So how are they responding?
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Their focus, they say, is on three things. Prudent capital deployment,
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timely project delivery, and strict cost controls.
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Sounds pretty defensive. Prudent capital, strict costs.
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Are they still looking for growth? They say they will, but the key word is cautiously.
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They'll cautiously pursue growth opportunities locally and regionally,
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but only if they align with strategy and offer good risk-adjusted returns.
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So caution is the watchword.
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Defense first. Maybe some very careful offense. Seems like it.
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The priority is financial discipline in what they see as a challenging environment.
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And that caution, that focus on saving cash, showed up in their dividend decision too, right? It did.
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They decided not to declare an interim dividend for this first half. And the reason given.
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Explicitly stated, the board adopted a prudent approach to conserve cash amidst
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the current challenging business environment.
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Ties right back into that overall strategy. Okay, so let's wrap this up.
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We've seen GGL navigate a tricky period.
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They managed to cut their losses significantly compared to last year.
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Mostly thanks to that big drop in finance costs, plus that one profitable property
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sale helping the margins. But at the same time, the balance sheet and cash flow
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show heavy investment pouring into building future properties.
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Which required a big cash outflow from operations and was mainly funded by taking
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on quite a bit of new debt.
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And looking ahead, they see ongoing uncertainties, rising costs,
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some mixed signals in their markets. So the plan is be careful.
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Prudent capital, control costs, deliver projects on time, and only very cautiously
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look for new opportunities.
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Financial discipline is the name of the game. Which really leaves you with a
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key question, doesn't it?
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They're investing heavily in these development properties that take serious
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money and they've increased their debt to do it.
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So how will that strategy of prudent capital deployment and strict cost controls
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balance out against the very real need to keep funding those projects?
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Because those projects are their future revenue stream.
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It's a definite tension. They're a real tightrope walk. They benefited from
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lower finance costs this period, but they still need to spend significantly
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to build that inventory for tomorrow's sales.
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How they manage that balance between cost control and necessary investment.
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That's definitely something to watch as they go through the rest of their financial year.