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Sen Yue Holdings 1H2025 Financial Results · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:07
  Welcome to the Deep Dive. Today, we're looking at a really interesting financial
• 0:12
  story. It's unfolding at Senu Holdings.
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  Their latest half-year results for 2025, they reveal this, well,
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  remarkable turnaround.
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  They've swung from a pretty significant loss this time last year to a solid net profit.
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  Yeah, that kind of shift really makes you pause, doesn't it?
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  It certainly begs the question, what's actually going on there?
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  Exactly. And it highlights, you know, just how dynamic these industries therein can be. For sure.
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  A closer look at these numbers, it should give us a much clearer picture.
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  Right. So for those maybe tuning in who are a bit newer to the name,
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  Senu Holdings, they work across a few main areas. Metal components manufacturing. Right.
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  They offer something called ED coding that's a specialized painting process.
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  And maybe most interesting, especially now, is resources recovery.
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  That includes processing valuable stuff like copper, aluminum,
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  and, you know, increasingly the black mass from used EV batteries.
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  Which is a huge growth area.
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  Totally. So our mission today is pretty simple, but I think crucial.
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  Let's dissect these financials. Try to understand the key things driving this
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  big change, the good and the bad. Yeah, both sides.
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  And just get a feel for what the future might hold for Senyu.
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  We're basing all this analysis on their official financial report,
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  the one for the six months ending March 31st, 2025.
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  Right, straight from the source. So if you're looking to get up to speed quickly,
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  but, you know, properly, you're in the right place. Yeah.
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  Okay, let's dive in the big picture first, revenue. Okay. Well,
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  the revenue figures, they immediately grab your attention.
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  Sen Yu saw an overall increase of, get this, over 100%. Wow.
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  Yeah. Jumped from $14.18 million in the first half of 2024 to a really substantial
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  $30.51 million this year. Over double. Exactly.
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  And what's fascinating is how that growth breaks down across their different
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  business segments. Absolutely.
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  That resources recovery segment, it's just, well, it's the star, isn't it?
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  Undeniably. Their revenue basically exploded.
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  Went from $7.62 million way up to this $23.23 million.
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  That's a huge leap. What's the engine behind that? Well, the company's announcement,
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  it points to two main things.
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  First, they've increased their overall capacity, just collecting and processing more stuff. Okay.
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  But maybe even more significant, they recently commissioned a brand new battery
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  processing line. Ah, the new line. Yeah.
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  And this upgrade seems to have seriously boosted their production volume and
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  even improved how efficiently they recovered the valuable materials.
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  So looks like that investment is really paying off. It certainly seems like it.
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  Now, the ED coding segment, that also saw an increase, but more moderate, right?
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  $6.19 million to $6.87 million. That's right. A bit more modest,
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  but still positive growth.
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  So what's the story there? The report talks about a general improvement in market
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  conditions for both their ED coding and hot dip galvanizing services.
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  They also mentioned something interesting, a resumption of orders that had been
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  delayed or maybe put on hold during the previous financial year.
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  Ah, catching up. Yeah, exactly.
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  So it seems like a mix of a healthier market and clearing some of that backlog.
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  Okay, that paints a clear picture. The metal component segment seems like the odd one out here.
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  A slight decrease in revenue is $886,000 down to $794,000.
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  Yeah, it's not a huge drop, but it definitely stands out when everything else
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  is growing so much. It does.
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  While other parts are booming, metal components saw a small dip.
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  The announcement doesn't give a ton of detail, but it maybe suggests different
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  market pressures there. Or maybe just not the main focus right now.
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  Could be. Perhaps not the primary strategic focus compared to,
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  you know, the booming resources recovery.
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  And we should also mention intersegment elimination. Right. Good point.
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  So we don't double count internal sales. Exactly.
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  Stops counting revenue when one part sells to another internally before the
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  final sale. Got it. Makes sense for integrated operations.
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  Revenue way up, mostly resources recovery. But what about the cost?
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  Did they balloon too? They did go up, yeah, which you'd kind of expect with
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  that much more activity.
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  Right. The cost of sales increased by 80%.
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  Went from $15.06 million up to $27.10 million.
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  Okay, 80% increase in costs versus over 100% in revenue. Right.
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  So it's broadly in line with that big jump in revenue. It suggests that while
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  costs are up because they're doing more, they haven't necessarily,
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  you know, spiraled out of control relative to sales.
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  And that brings us to gross profit. And this is where you see that really striking turnaround.
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  It really is. They went from a gross loss of $877,000 last year. A loss.
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  A gross profit of $3.41 million this year.
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  That's a swing of over $4 million.
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  Huge swing. It really highlights the impact of that higher revenue and keeping
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  costs reasonably managed alongside
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  it. And the gross profit margin figure tells that story, too, right?
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  Improved efficiency. Precisely. It tells an even more compelling story, I think.
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  The margin shifted from negative 6.2% to a positive 11.2%. That's a significant improvement.
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  Really shows how much better they're managing direct costs relative to the revenue coming in.
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  Yeah. And what's also quite interesting here is the big drop in the allowance for inventories.
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  Oh, yes, I saw that. Down from nearly $0.9 million to just stir you $0.15 million.
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  Why is that significant? Well, that decrease is mainly down to more stable metal
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  prices during this period, first half of 2025. Compared to last year? Exactly.
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  Compared to the significant volatility they saw in the same period last year.
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  When prices are stable, companies don't need to set aside as much provision
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  for potential drops in the value of their inventory.
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  Less risk of inventory losing value on the books. Exactly.
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  So that stability directly helped their bottom line. Okay. Moving down the income statement.
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  Other operating income took a bit of a hit, down 49%. Yeah, that dipped.
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  The main reason given in the report is lower sales from scrap material,
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  apparently with the big surge in orders for the higher value black mass and resources recovery.
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  Ah, they prioritized. Seems like it. They strategically prioritized processing
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  that material over other types of scrap.
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  Looks like a deliberate shift towards the more profitable in-demand part of recycling.
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  Makes sense. And then other gains and losses flipped positive from a loss to a gain.
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  That's good news. Yes. That's mainly a nice foreign exchange game.
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  $6.6 million.
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  How did that happen? Basically, the Singapore dollar strengthened against the
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  Malaysian ringgit during the period so that positively impacted their Malaysian
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  operations and transactions when translated back. Got it.
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  Forex tailwind. Now, distribution expenses went up.
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  They did, but the explanation seems pretty straightforward, linked directly
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  to higher trading activity in that fast-growing resources recovery segment.
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  So a consequence of growth. Seems so.
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  Interestingly, though, administrative expenses actually decreased by 11%.
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  That feels a bit counterintuitive with overall growth. It does seem slightly unexpected, yeah.
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  But the report clarifies it was mainly driven by lower employee expenses.
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  Sounds like a reduction in headcount.
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  And just a general decline in other admin overheads suggest they've found some
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  efficiencies in their back office even while scaling up operations.
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  Whether that's sustainable long term. That's the question, isn't it?
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  Depends on future growth and needs. And finance expense is also down a bit.
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  30%. Yeah, every little bit helps, right? A 30% reduction, while not the biggest
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  number on the page, certainly adds to the improved profitability picture.
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  So, okay, putting it all together, profit before income tax.
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  That's where we see that massive swing.
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  Loss of S3.34 million dollars last year to a profit of S1.42 million dollars this year.
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  That's really the headline figure capturing this turnaround, isn't it?
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  It truly is. It just encapsulates all those operational and financial improvements
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  they've managed over the last year. And then income tax expense.
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  That dropped dramatically, too, from $7.28 million way down to just $468,000.
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  That looks huge. It's a very significant drop, yeah. But there's a reason.
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  The announcement clarifies that the much higher figure last year in 1H2024 included
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  reversing some deferred tax assets. Okay, what are those again?
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  Think of them like tax benefits they recognized in the past that are now being unwound or used up.
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  Plus, there were some adjustments related to prior year's taxes in that figure.
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  Ah, so last year's number was unusually high for specific reasons. Exactly.
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  So this year's S-468,000 figure is probably a much cleaner reflection of their
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  actual tax obligation for the current period's profit.
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  Gotcha. Which finally leads us to the bottom line.
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  Profit for the period, $7.95 million. Yep, almost a million bucks in profit.
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  Which is, again, remarkable turnaround from that S10.62 million dollar loss
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  last time. Truly remarkable.
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  And naturally, that flows right through to earnings per share.
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  Improved from negative 0.333 cents to positive 0.03 cents per share.
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  Okay, so the income statement, pretty clear picture.
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  Company turned things around back in the black. But what about their overall financial health?
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  Stability. Let's look at the balance sheet highlights as of March 31st. Sure.
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  So from the balance sheet view, their working capital, that's current assets
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  minus current liabilities, basically a measure of short-term liquidity.
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  Right. That's improved slightly.
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  Reached S8.44 million dollars.
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  And the net asset value per share also ticked up a tiny bit to 0.74 Singapore cents.
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  Okay. So small positive signs on an immediate standing. Generally,
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  yes. What about non-current assets? Property, plant, equipment?
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  Relatively stable, which, you know, is kind of what you'd expect over just six
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  months unless they bought or sold something major. But they did mention higher depreciation.
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  Yes. Good catch.
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  That increase in depreciation is a direct result of that new battery processing
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  line we talked about. Right. New equipment starts getting depreciated. Exactly.
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  Any big new kit like that adds to depreciation costs over its useful life.
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  It's also worth noting they did review their property assets and decided no impairment was needed.
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  So, asset values holding up. Okay.
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  Now, current assets, they were up 15%, mainly due to more receivables. That's right.
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  Trade and other receivables drove that increase, and the report specifically
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  mentions higher advance payments than you made to its suppliers.
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  Ah, paying suppliers up front. Why?
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  To secure a reliable supply of battery scrap. It's a proactive move.
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  Suggests they're expecting strong demand to continue in resources recovery and
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  want to make sure they get the raw materials locked in. Makes sense.
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  Planning ahead. And on the other side, current liability is also up 13%.
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  What was the main driver there?
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  Primarily a big jump in something called contract liabilities.
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  Okay, break that down for us. What are contract liabilities? Sure.
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  Contract liabilities, they essentially represent payments a company has received
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  from its customers for goods or services they haven't delivered yet.
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  So customer advances. Exactly.
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  And in Sen Yu's case, this jumped significantly from about S3.6 million dollars
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  up to S8.18 million dollars.
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  Wow, more than doubled. Yeah, it strongly suggests really robust customer demand
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  and a healthy backlog of orders, specifically for their black mass processing
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  and resources recovery.
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  It's a good leading indicator for future revenue. Definitely shows customers
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  are lining up and paying in advance. Good sign.
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  They also mentioned lower loans and borrowings and current liabilities.
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  Yes, managing down short-term debt, which is generally positive.
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  And the report notes, as you'd expect, some borrowings are secured,
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  mortgages over land and buildings, a corporate guarantee, pretty standard stuff. Okay. So...
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  Balance Sheet suggests slightly better short-term position, strong order book in that key growth area.
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  Now let's hit the cash flow. Where did the actual cash go?
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  Right, the cash flow statement. So in the first half of 25, Senyu generated
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  positive cash from its operating activities.
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  S, $2.62 million. Okay.
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  Driven mainly by their profit before working capital changes and crucially by
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  that big increase in advance payments from customers we just talked about.
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  Ah, the contract liabilities effect. Exactly.
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  Though that positive inflow was partly offset because they spent cash increasing
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  inventory and receivables and paid down some payables.
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  Got it. What about investing activities, cash use there?
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  Pretty modest amount. They used $0.23 million, about a quarter million,
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  mainly for buying more plant and equipment.
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  The battery line again, or related things. Likely ties back to that ongoing
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  expansion and upgrades of resource recovery.
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  And finally, financing activities. Looked like cash out there.
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  $1.78 million used. That's right.
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  That outflow was mainly the company making repayments, lease liabilities,
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  bank loans, a short-term loan, so actively managing down their debt.
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  Okay, so net effect of all that. Overall, they generated a net increase in cash
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  and cash equivalents of $6.62 million, ended the period with $6.64 million in cash.
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  Seems like a reasonably healthy cash position. It does.
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  Generating cash from operations, deploying it strategically for investment,
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  and paying down debt. Looks okay.
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  Alright, so that's the story of the first half, now let's pivot to the future.
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  What's the outlook for Senyuu, for their industries?
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  Okay, outlook. For resources recovery, the general view for EV battery recycling
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  over the next, say, 12 months. It remains pretty robust.
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  Big potential there. But there's always a but, isn't there? There usually is.
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  And here it's a critical one.
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  Profitability in this sector is hugely influenced by volatile metal prices.
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  Lithium, cobalt, and especially nickel. Ah, nickel.
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  They mentioned that specifically. They did. The report points out that while
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  lithium and cobalt are down from their crazy peaks, nickel prices have really
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  tumbled. Substantial decline. Why nickel?
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  Oversupply in the global market, largely coming out of Indonesia.
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  They mentioned nickel hitting a five-year low. Ouch.
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  That's got to be a headwind for a recycler. Absolutely. It creates a real challenge.
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  See, higher metal prices usually mean better margins for recyclers selling the recovered materials.
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  Right. But this current environment, with subdued and choppy prices,
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  especially for nickel, it could definitely squeeze their profits.
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  Senyu acknowledges this risk directly in their outlook. So how do they plan
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  to navigate that, just hope prices go up?
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  Well, their stated strategy seems to be focusing on expanding processing capabilities
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  even more and driving efficiencies through sheer volume.
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  Ah, economies of scale. Basically, yeah. Aiming to maybe offset lower profit
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  per unit by just processing a heck of a lot more material. Logical approach
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  in a commodity business.
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  Okay, what about ED coding? Sounds like the Malaysian auto market is key there.
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  It is, and the outlook there is a bit mixed, a bit nuanced.
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  How so? Well, the Malaysian auto sector saw a rebound in sales back in March 2025.
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  Okay, good sign. But the overall expectation for the full year is likely a decline
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  in total industry volume. Why the decline?
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  Factors like easing consumer sentiment, maybe a more cautious economic outlook
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  in Malaysia generally. And didn't they mention wages?
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  Minimum wage increase in Malaysia. Yes, absolutely. That's another factor.
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  The minimum wage went up to RM1700, effective Feb 1st this year.
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  That's going to impact costs, right?
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  ED coding seems like it would use a fair bit of labor. It likely will, yeah.
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  It'll impact operating costs and profitability in that segment.
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  To counter that potential margin squeeze, the company mentioned strategic pricing
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  moves and expanding their services.
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  Specifically mentioned introducing acrylic ED coding. Maybe that offers different
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  pricing or attract different customers. Trying different levers.
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  Now, stepping back, broader picture.
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  Global economy, U.S. policy shifts. The report touched on that.
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  It did, briefly. Acknowledged that, you know, potential U.S.
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  Policy shifts may be rolling back EV mandates, pausing clean energy funding,
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  proposed tariffs on battery materials. Yeah, things being talked about.
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  Right. These mainly create disruption within the U.S. domestic supply chain itself.
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  So not a direct hit for sinew necessarily. The direct impact of specific tariffs
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  might be limited on their current operations. That's what they suggest.
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  But the bigger worry is probably broader macroeconomic risks.
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  Like if those policies lead to an economic slowdown or weaken consumer confidence
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  globally, especially in a big market like the U.S., that could indirectly hit
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  demand across and use businesses. Right. Knock on effects. Exactly.
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  So the company says they're monitoring all this closely, exploring alternative
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  strategies, treating to stay adaptable. Makes sense.
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  Finally, dividends. Anything for shareholders? No, nothing declared or recommended
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  for the first half of 2025. Why not?
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  Stated reason was pretty standard. Conserve funds for business activities,
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  support ongoing operations, potential future growth, often the case for companies
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  reinvesting heavily or navigating market shifts.
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  Yeah, it makes sense to keep the cash in the business right now.
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  It's a common, often sensible approach when you're focused on growth or dealing
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  with uncertainty. Okay, so let's wrap this up.
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  Our deep dive into Senu Holdings' first half 2025 results.
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  It really shows a company that pulled off a significant financial recovery.
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  Yeah, quite impressive.
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  Largely powered by that huge growth in resources recovery, riding that EV battery
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  recycling wave, plus steady performance from ED coding.
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  They went from a big loss to a net profit.
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  Shows their investments and operational tweaks are having an impact. Definitely.
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  But as we've discussed, it's also clear they're operating in some challenging spaces.
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  For sure. That volatility in metal prices, especially in the crucial resources
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  recovery sector, that's a key risk. Needs constant watching.
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  And the evolving conditions, the cost pressures in the Malaysian auto market
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  for ED coding, that needs careful management too.
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  And then you layer on potential global economic headwinds from policy shifts,
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  adds uncertainty. Exactly.
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  So for you listening, keeping a close eye on those key things,
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  global metal prices, especially nickel, and what's happening in the Malaysian
• 18:08
  auto market, that'll likely be crucial for understanding how Senyu performs going forward. Right.
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  And this deep dive, it kind of leaves us with an interesting question, doesn't it?
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  Considering everything, the impressive turnaround, yes, but also the reliance
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  on these volatile commodity markets,
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  the changing global economy, what do you see as the biggest potential opportunities
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  and maybe the most significant risks for Senu Holdings as they move through
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  the rest of 2025 and beyond?
• 18:34
  Good question. It's that complex mix, isn't it? Market forces,
• 18:37
  company strategy, those big global trends, that's what will ultimately shape where they go next. .