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Camsing Healthcare Second Quarter 2026 Results · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:07
  Welcome back to the Deep Dive. Today, we're taking a close look at Kamsing Healthcare Limited.
• 0:13
  That's right. Specifically, their Q2 results for the six-month ending July 31st, 2025.
• 0:18
  Yeah, and this isn't just, you know, reading off numbers. This is about understanding
• 0:22
  a company that's trying some pretty major financial surgery on itself. Hmm.
• 0:27
  In a tough sector, too, health, foods and supplements. It's volatile.
• 0:31
  OK, let's unpack this then. We've got the financials here detailing this attempt
• 0:35
  to restructure, get out of the red. Exactly.
• 0:38
  And because they've been doing quarterly reporting since, what,
• 0:41
  2021, we have a pretty clear view.
• 0:44
  Right. So the key isn't just, oh, revenues down.
• 0:47
  Management practically told us that would happen with the restructuring.
• 0:50
  So what is the core question we're digging into? It's whether these big moves,
• 0:54
  closing stores, cutting costs are actually working long term.
• 0:57
  Are they creating sustainable savings or is the whole just getting deeper?
• 1:02
  OK, so for you listening, we're going to pinpoint where they succeeded in cutting costs.
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  Maybe uncover some surprises where they didn't and figure out how stable this
• 1:12
  company really is looking ahead.
• 1:13
  Let's dive in. All right. Starting the top line, the revenue.
• 1:17
  Comparing this six month period to the same time last year. Well, it definitely shrank.
• 1:22
  Revenue fell by 21 percent. Dropped from $2,625,000 down to $2,080,000.
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  A noticeable dip. It is, but again, you have to see the why.
• 1:34
  The company is pretty clear this was, you know, planned. How so?
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  Where did the drop come from mostly?
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  Well, if you look closer, the biggest hit was corporate sales.
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  That almost halved. Halved.
• 1:43
  Yeah, down from about $659,000 to $315,000.
• 1:48
  And that lines up directly with their strategy. Which was about the retail outlets, right? Exactly.
• 1:52
  They decided to reorganize their whole retail setup. And the numbers back that up.
• 1:56
  The documents show they closed, what, eight retail outlets between March and August 2025.
• 2:01
  That's right. Leaving just four still operating. So they're deliberately getting smaller.
• 2:06
  If we connect this to the bigger picture, this kind of shrinkage isn't necessarily just market forces.
• 2:11
  It's them actively executing a plan. Shutting down stores they flagged as loss making.
• 2:17
  Precisely. But, and this is the important but, but strategically smaller hasn't
• 2:22
  meant profitable yet. Ah, so the bottom line.
• 2:25
  The group still recorded a loss before tax as $423,000 for these six months.
• 2:31
  How does that compare to last year?
• 2:33
  Slightly higher. Actually, last year it was $412,000, so a 3% increase in the loss.
• 2:39
  Okay, so revenue down by design, but loss is still creeping up a bit.
• 2:42
  What about the profit on the sales they did make, gross margin? That slipped a bit, too.
• 2:47
  Went from 56% last year down to 54% this period. And the reason given was?
• 2:52
  Change in the product mix. That's the official line. Hmm.
• 2:55
  Change in product mix. That can mean a few things, can it? It sure can.
• 2:59
  When you're closing eight stores that quickly, it might mean they had to,
• 3:02
  like, liquidate stock at lower prices.
• 3:04
  Fire sales, basically. To avoid moving it or storing it. Could be.
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  Or maybe the customers they are keeping are shifting online and the products
• 3:12
  sold there just have lower margins than in those boutique stores they closed.
• 3:16
  Right. So a complex picture already.
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  Revenue down as planned, margin under a bit of pressure, possibly from the restructuring
• 3:22
  itself. Yeah. And that brings us to the cost side.
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  The whole strategy really hangs on whether they controlled expenses effectively.
• 3:30
  And this is where it gets, as I said, really interesting, because they were
• 3:34
  incredibly disciplined in some areas.
• 3:36
  Absolutely. Some big wins on cost control.
• 3:39
  But then ran into some surprising roadblocks elsewhere. Let's look at the wins first.
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  Marketing and distribution costs, you'd expect these to fall with fewer stores.
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  And they did, cut by a massive 44%. 44%? That's huge.
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  How much is that in actual dollars? It's a saving of $787,000,
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  down from S1.8 million dollars to just over S1 million dollars. Wow.
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  Okay, how did they manage such a deep cut so fast?
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  Well, the biggest piece was reduced depreciation on what they call right-of-use
• 4:09
  assets. Ah, the leases for the stores.
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  Exactly. That value tied up in the long-term leases.
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  It dropped from S572,000 dollars last year to just S36,000 dollars this year.
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  Because they terminated the leases on those eight closed stores. Bingo.
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  Wiped out that long-term paper cost almost immediately.
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  They also slashed finance costs by 77%, down from S-293,000 to $66,000,
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  mainly because they have lower outstanding loans now. Okay, so they seem to
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  be doing exactly what you'd expect.
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  Cutting costs tied directly to the closed stores, paying down debt.
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  Getting leaner. They are.
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  But, and here's the contradiction, the real aha moment in these numbers. Go on.
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  Administrative and other operating expenses, you'd expect those maybe to stay
• 4:54
  flat or even dip slightly with fewer stores to manage, right? Yeah, absolutely.
• 4:57
  Less overhead. Instead, they actually increased by 26%. Increased by 26%. How?
• 5:04
  Went from $630,000 up to $791,000.
• 5:08
  Wait a minute. They close eight stores, save a fortune on the lease depreciation?
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  But their admin costs go up. What's driving that? Their report says it's primarily
• 5:17
  due to higher rental costs incurred in the current period.
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  Higher rental costs, but they just closed eight locations.
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  How can rental costs go up? Are they stuck paying huge penalties or maybe leases
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  on empty buildings they can't get out of yet?
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  That's the million-dollar question, isn't it? It suggests the real estate liabilities
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  are stickier and more complex than just shutting the doors.
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  So that big saving on the right-of-use asset depreciation...
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  This admin cost increase is working directly against it.
• 5:46
  Absolutely. It negates a big
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  chunk of the progress they made on the marketing and distribution side.
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  It's like one step forward, half a step back. It's a major operational snag in this report.
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  And there was another factor dragging down the bottom line too, right?
• 5:58
  Other income? Yeah, that dropped significantly too by 61%. But that was mainly
• 6:03
  due to a one-off thing last year.
• 6:05
  Ah, okay. What was that? Last year's figure, S-853,000, included a huge non-repeatable
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  item, waived interest on some borrowing when they resumed trading after a suspension.
• 6:18
  I see. So last year's loss looked a bit better than it might have otherwise
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  because of that windfall.
• 6:23
  Exactly. They did get a small gain on terminating some leases this year,
• 6:27
  which helped other income a bit, but nowhere near enough to match that big waiver from last year.
• 6:31
  Got it. Okay. So performance-wise, deliberate revenue drop, slight margin pressure,
• 6:36
  great cost-cutting in some areas, but undermined by rising admin rental costs
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  and less other income. That's a fair summary.
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  Now, let's pivot from performance, the P&L, to the foundation, the balance sheet.
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  Right. Because all this restructuring and ongoing losses must be putting pressure
• 6:53
  on their overall financial position. Serious pressure.
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  As of July 31st, 2025, the group's net liabilities.
• 7:00
  Meaning debts outweigh assets. Correct. That figure stood at S, $5,683,000.
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  And how does that compare to, say, the start of the year? It's worsened.
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  Six months prior, it was $5,260,000. So the hole got about $400,000 deeper in six months.
• 7:17
  Okay, that's concerning. But what about day-to-day survival, cash?
• 7:20
  That's where it looks really precarious. Cash and bank balances were down to just F $37,000.
• 7:25
  $37,000 for the entire group. $37,000, down from $128,000 six months earlier. Wow.
• 7:33
  That's 37K or K in the bank for a listed company with millions in liabilities.
• 7:38
  They're running on fumes. That's less cash than a lot of small shops have. It is incredibly tight.
• 7:43
  They are absolutely living check to check, as you say. So how are they paying the bills?
• 7:47
  Borrowings must still be significant. Oh, definitely. Total borrowings are nearly
• 7:51
  $2.8 million, split between current and non-current.
• 7:56
  And where did the cash they did use come from? They must have needed cash injections. They did.
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  The cash flow statement shows net cash from financing activities was S-253,000.
• 8:07
  Meaning new money came in. Yes. It came from two main sources,
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  a S-400,000 loan from a controlling shareholder.
• 8:15
  Ah, the main owner stepping in. And another S-200,000 from a third-party lender.
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  So basically, new loans kept the lights on. They're completely dependent on
• 8:23
  external financing right now.
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  Which brings us to a critical point. It does. This raises an important question,
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  the going concern concept. Right.
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  Can they actually keep operating? The auditors must have looked at this. They did.
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  And the sources clearly state there is a material uncertainty about the group's
• 8:38
  ability to continue as a going concern.
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  That's serious language in a financial report.
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  Minimal cash, growing net liabilities, ongoing losses.
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  How can they even prepare these accounts, assuming they will survive the next
• 8:50
  year? There's only one reason they can.
• 8:53
  Which is? An explicit promise, an undertaking, from that controlling shareholder.
• 8:57
  The same one who provided this $400,000 loan. Yes.
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  That shareholder has formally promised to provide the necessary financial support
• 9:05
  to ensure the group can pay its debts when they become due.
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  So, without that personal guarantee, essentially. The whole basis of the financial
• 9:13
  statements would likely collapse.
• 9:15
  Auditors probably wouldn't sign off on a going concern basis otherwise.
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  So the company's survival isn't really about its current operations or market strategy anymore.
• 9:24
  Not directly. It hinges almost entirely on the continued willingness and ability
• 9:28
  of one specific shareholder to keep funding the losses.
• 9:32
  That's a very different kind of risk for anyone else involved,
• 9:35
  like minority shareholders or creditors. It's quite opaque.
• 9:38
  Absolutely. It shifts the risk profile significantly. Okay, that paints a picture
• 9:41
  of, well, extreme financial dependence.
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  Let's look ahead then. What's the plan?
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  Given this reliance, how do
• 9:49
  they intend to get back on their own feet and climb out of this deficit?
• 9:53
  Well, management's commentary acknowledges the tough environment first.
• 9:57
  They say they expect uncertain global economic conditions to hit consumer sentiment
• 10:02
  in the next few quarters. So they're not expecting an easy ride from the market?
• 10:06
  No, it's a pretty sober outlook on the external factors. So what's the internal strategy to fight that?
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  It seems to be built on three main pillars.
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  First, develop new products.
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  Second, push hard into new sales channels, specifically online. The digital pivot.
• 10:22
  Exactly. And third, keep a very tight lid on prudent cost management, they call it.
• 10:27
  Though obviously they need to fix that administrative cost issue we talked about. Right.
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  Get lean, focus on product innovation, and really make that online channel work.
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  That seems to be the core plan.
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  Classic turnaround playbook in many ways.
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  But a lot hinges on whether customers actually followed them online or to the
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  remaining stores after those eight closures.
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  Did they manage to keep them? They claim they did.
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  The commentary says the company managed to retain most customers by redirecting
• 10:54
  them. To the four remaining stores or online. Correct.
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  And crucially, they mentioned that the online channel has shown promise with
• 11:02
  an improved growth during the period. Okay, so that's the flicker of hope then.
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  If that online growth is real and can scale up. That's potentially the way out.
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  It needs to grow fast enough to offset the shrunken physical base and eventually
• 11:14
  cover those costs and start paying down debt.
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  And in the meantime, that shareholder lifeline remains critical.
• 11:20
  Absolutely essential. And we see evidence of that even after this reporting period ended.
• 11:25
  Oh, what happened? On September 1st, 2025, just after these results,
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  The company secured another S$200,000 loan from that same major shareholder.
• 11:36
  Interest-free this time. Wow.
• 11:38
  So the support is ongoing and immediate, confirms everything we just discussed
• 11:42
  about dependents. It really does.
• 11:44
  Okay, so let's try and summarize the key takeaways for you, the listener.
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  We've got a company, Kamsing Healthcare, that's been bold in restructuring.
• 11:52
  Definitely executed the store closure part of the plan, cut related costs like
• 11:57
  lease depreciation significantly.
• 11:59
  But that success has been partly canceled out by some persistent financial issues. Right.
• 12:04
  Those rising administrative rental costs are a major puzzle and a drag.
• 12:09
  And the loss looks worse this year, partly because last year had that big one-off income boost.
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  So what does this all mean? Well, it means Kamsing's financial stability isn't
• 12:18
  really in its own hands right now.
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  It depends almost entirely on the controlling shareholders' willingness to keep funding it.
• 12:25
  The going concern note makes that crystal clear. There are survival hinges on
• 12:29
  that support continuing long enough for the online strategy to really take off.
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  And for that online growth to be profitable enough to fix the underlying issues,
• 12:36
  like those sticky rental costs, and eventually start repaying those shareholder
• 12:40
  loans, it's a race against time funded by one key backer.
• 12:45
  Which leaves us with that provocative thought, that puzzle, really, for you to consider.
• 12:49
  They close aid stores, save big on depreciation.
• 12:53
  Yet admin expenses jump 26% because of higher rental costs.
• 12:59
  What complex, maybe hidden long-term liabilities are still buried in that physical
• 13:03
  store portfolio that stopped them getting the full cost savings,
• 13:07
  even when they shut locations down?
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  That legacy complexity, that's the nut they still need to crack,
• 13:12
  even as they pivot online.
• 13:14
  A fascinating structural problem to keep an eye on indeed. Definitely one to
• 13:17
  watch. We'll be tracking it.
• 13:18
  Thanks for joining us on The Deep Dive. We'll catch you next time.