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Emerging Towns & Cities 1Q2025 Financial Results · 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. We're here to unpack those fascinating stories hidden
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  inside financial reports and, well, big company changes.
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  Today, we've got a really compelling one. It's about a company doing a complete
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  180, basically shedding its old identity for a totally new future.
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  We're talking about emerging towns and cities, Singapore LTD, ETC.
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  We'll be digging into their latest Q1 2025 results. But it's not just,
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  you know, crunching the numbers.
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  We want to get at the why behind them, understand this huge strategic pivot
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  they've made and what it signals for where they're headed. It's quite a story.
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  It really is because ETC, they've just gone through this monumental shift.
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  They've completely exited their old core business. Right.
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  And understanding that is absolutely key to making sense of their current financials
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  and, well, what comes next for them.
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  It's also really important to mention right off the bat, they're putting out
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  these quarterly results because their auditor gave what's called a qualified
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  opinion on their last annual statements, the ones for 2024. Oh, OK.
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  A qualified opinion. That sounds serious. It is. It basically means the auditors
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  found some significant issues or couldn't get all the info they needed for the 2024 financials.
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  It's a bit of a red flag. Yeah. Puts a lot of pressure on ETC to be crystal
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  clear about everything now, especially as they're navigating this,
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  frankly, pretty risky new path.
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  OK, let's unpack that. So for listeners who might not know ETC Singapore LTD,
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  they've been listed on the SGX for a while.
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  But these latest numbers, they just look...
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  Different. What's the big change here? Well, historically, their main thing
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  was property in Myanmar.
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  Selling and renting units. You probably remember the Golden City project. Vaguely.
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  Yeah. Golden City. That was their big focus. But that's all done now.
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  They completely sold off that entire Myanmar business.
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  It was called the Das Group on December 26, 2024.
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  Wow. OK. End of last year. Exactly. So these Q1 2025 results we're looking at,
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  they are purely about the new direction. The old business is literally, you know, off the books.
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  It's a clean slate, financially speaking, for what they're doing now.
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  A complete change of scenery then. Golden City is history.
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  So what's the new landscape? What are they actually doing now?
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  Their new core focus, and this actually started getting folded into their results
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  back in Q2 of 2024, is live streaming e-commerce.
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  Live streaming e-commerce? Okay. Yeah, specifically in the People's Republic
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  of China, selling consumer goods
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  both online and, it seems, some offline channels too. What kind of goods?
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  It looks like a pretty wide range. Things like consumer foods,
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  snacks, health foods, condiments, stuff like that.
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  It's a totally different ballgame from property development.
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  Yeah. Very fast-paced retail. Right. Needs a different skill set entirely.
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  Okay, so bearing that huge shift in mind, let's get into the Q1 2025 numbers themselves.
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  What do these condensed financials tell us at first glance about how this new
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  venture is starting off?
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  Okay, so if we just isolate the continuing operations, that's this new e-commerce business, right?
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  Right. The revenue for Q1 2025 came in at $976,000, and that's all from this new China business.
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  Okay, just under a million Singapore dollars. Yeah.
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  Now compare that to Q1 2024.
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  Back then, continuing operations had zero revenue, absolutely nothing.
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  All the big revenue they reported last year, over $12.8 million in Q124,
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  that was entirely from the Myanmar property business that's now gone.
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  Got it. So revenue stream established, albeit starting relatively small compared to the old days.
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  But the big question always is the bottom line. Are they making money with this new thing yet?
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  Ah, no, not yet. In fact, quite the opposite. For continuing operations,
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  the loss before tax actually ballooned significantly.
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  It was $2,605,000 in Q1 2024.
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  Wow, over 2.6 million loss. Yeah, compare that to a loss of S260,000 in Q1 2024
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  from, well, corporate overheads back then, I suppose.
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  So a tenfold increase in the loss from continuing up. Pretty much,
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  yeah. And per share, the loss widened from $0.03 to $0.25.
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  Now, you might see the total comprehensive loss number look slightly better.
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  It went from about $2.58 million loss in Q1 2024 to SRA 2.64 million loss in
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  Q1 2025. OK, so total loss is kind of flat.
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  Sort of, but that's actually a bit misleading.
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  The reason the total loss didn't jump as much is because the discontinued Myanmar
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  operations had a huge loss component back in Q1 2024.
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  So taking that out makes the total look better. But the core new business,
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  the e-commerce part, is definitely running at a bigger loss right now.
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  OK, so it sounds like a classic new chapter story, maybe.
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  Yeah. Starting something big comes with big initial costs and hurdles.
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  That seems to be the case.
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  And it leads right into the why, doesn't it? Why are losses up so much,
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  even though they've got this new revenue coming in? Exactly. What's driving it?
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  Well, it really boils down to the costs of starting and scaling up a brand new
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  complex business like this.
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  Remember, they only really started consolidating this China e-commerce stuff in Q2 2024.
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  Right. So Q125 is still very early days. Very early. And it looks like a period
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  of really intense investment. You see it clearly in the expense lines.
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  Like what? Staff costs. They went from about $100,000 in Q124 to us $1.9 million in Q125. Whoa.
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  That's huge. Almost $2 million just on staff for one quarter. Yep.
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  A nearly 20-fold increase. And you have to assume that's not just hiring more
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  people, but hiring different, probably more expensive people.
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  You know, live streamers, marketing folks, logistics experts needed for e-commerce in China.
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  Yeah. Makes sense. What else? Other operating expenses also shot up from $85,000 to $7.9 million.
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  Okay. And they break that down. It's things like marketing and advertising,
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  which you'd expect, plus, professional fees, travel costs, all the stuff associated
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  with building this new venture from the ground up in a new market.
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  So basically the cost of getting established and trying to grab market share.
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  That's exactly what it looks like. There's also another factor they mentioned. Oh, yeah. Seasonality.
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  They noted that Q1 often sees lower sales because of the Chinese New Year holiday period.
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  Consumer demand dips. Operations slow down a bit. Ah, OK.
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  So expenses are ramping up, but sales might have been a bit seasonally slow in Q1 anyway.
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  Possibly, yeah. It adds to the pressure on the bottom line in these early stages.
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  Though you do wonder if there are other market challenges beyond just the holiday
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  lull affecting those initial sales figures. It's a tough market. True.
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  What about cash flow? Does that tell a similar story? Oh, definitely.
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  It really reinforces the investment narrative.
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  Net cash used in operating activities was around just $3.7 million in Q1 2025.
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  Used. So cash flowing out. Right. Compared to Q1 2024, where the old business
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  actually generated S5.1 million dollars in cash from operations.
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  Big swing. Huge difference.
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  And then there's investing activities. They used another S340,000 dollars there,
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  mostly buying property, plant and equipment, you know, tangible stuff needed
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  for the new business. So spending on operations and spending on assets.
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  Exactly. And the result, their cash pile shrunk quite a bit.
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  They started the year, end of December 2024, with about 5.47 million dollars
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  in cash and equivalents. By the end of March 2025, that was down to S1.16 million dollars. Oof.
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  You'd expect some burn in an expansion phase, sure, but that's quite rapid.
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  How is the balance sheet looking overall then? Well, it reflects that strain.
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  The group reported net current liabilities of S1.2 million dollars.
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  Net current liabilities, meaning?
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  Meaning their short-term debts, the stuff due within a year,
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  are actually higher than their short-term assets, the things they can easily turn into cash.
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  Okay, that's not ideal. It's not uncommon for companies in aggressive growth
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  mode, but it does mean they're relying on future performance or funding to cover
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  near-term obligations.
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  And total equity, the company's net worth, dropped from S3.86 million dollars
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  at the end of 2024 down to S1.22 million dollars by the end of Q125.
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  Wow. Yeah. So the net asset value per share fell quite sharply,
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  too, from Sertar dollars 39 cents down to 12 cents. So the buffer is getting thinner.
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  Despite all that, are the directors still confident? What about that going concern idea?
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  They do maintain their view that the going concern assumption is appropriate.
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  They point to the fact that they still have positive net assets overall,
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  even if current liabilities are high.
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  But for you, the listener, seeing this cash burn, the net current liabilities,
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  and remembering that auditors qualified opinion, it definitely paints a picture
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  of a company navigating a very tight financial situation right now.
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  Okay, so they've taken the initial hit, the losses are up, cash is being burned,
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  building this new thing. Yeah. This is where it gets really interesting, right?
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  What's the plan? What's the outlook? Are they doubling down or pulling back?
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  Oh, they are absolutely doubling down. Aggressively so. The pace of expansion
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  in China for this e-commerce business is, well, remarkable. Oh, so.
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  Just in Q1 2025 alone, they bought one subsidiary and set up 11 brand new ones
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  in the PRC. 11. Three months. Yep.
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  Bringing their total dedicated subsidiaries for this new business up to 49.
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  And get this, since the start of Q2, so since April 1st, they've already incorporated
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  another nine subsidiaries.
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  Good grief. So that's like, what, 58 subsidiaries now just for this China e-commerce play?
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  Seems like it. It signals a really, really strong commitment to scaling this
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  operation incredibly fast.
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  It looks like a classic land grab strategy trying to build footprint and market
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  share as quickly as possible, perhaps even before focusing heavily on profitability.
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  That's a massive footprint build out.
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  What's the thinking there? What makes them so confident about the Chinese market
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  to justify this speed and expense, especially given the Q1 numbers?
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  Well, their strategy taps into the broader China e-commerce narrative.
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  China still dominates global e-commerce, right? They produce so much domestically.
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  They have the logistics sorted out. It gives them a huge edge.
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  And even though there's talk of a wider economic slowdown, the Chinese government
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  is really pushing domestic consumption.
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  And online buying, especially driven
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  by live streaming and social media discovery, is growing like crazy.
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  So they see a massive growing market tailor-made for what they're trying to do. Exactly.
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  It's a market with enormous potential, even if it's also incredibly competitive.
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  You know, this live streaming game...
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  It's almost like performance art
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  fused with retail. The top players move unbelievable amounts of product.
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  Right. Billions in a single event, sometimes.
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  Yeah, but breaking in and competing against established giants is tough.
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  It requires not just cash, but the right talent, the right tech, the right connections.
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  Which might explain those huge staff costs we saw earlier.
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  Precisely. They're investing heavily. And despite the Q1 losses,
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  the directors are projecting confidence.
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  Their official outlook states they expect the group to be profitable for the full year of 2025.
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  Profitable for the year, really, after starting with a $2.6 million loss in
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  Q1. That seems ambitious.
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  It is ambitious. They add the usual caveat, you know, barring unforeseen circumstances,
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  like a major downturn in China's economy.
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  But yeah, it's a bold call. It suggests they expect a very significant ramp
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  up in revenue or some serious cost control kicking in later in the year,
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  or perhaps both. Given the cash burn and the need for investment,
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  I assume dividends are off the table.
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  Completely. They explicitly stated no dividend declared or recommended for Q1 2025.
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  Makes sense. They said they need to reserve cash for working capital,
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  which is exactly what you'd expect and frankly what you'd want them to do in this situation.
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  Reinvest everything back into the business to try and make this pivot work. Absolutely.
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  Wow. What a transformation story unfolding here for emerging towns and cities,
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  Singapore, from Myanmar property
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  to this full throttle dive into Chinese live streaming e-commerce.
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  It's just quite something. It really is a complete reinvention.
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  And these Q1 results, they perfectly capture that moment of transition, don't they?
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  You see the costs, the cash burn of the massive strategic shift,
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  but you also see the scale of their ambition, the heavy investment in a market
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  they clearly believe holds huge promise, even with all the competition.
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  Yeah, the sheer number of subsidiaries, the profitability forecast,
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  it shows incredible determination.
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  That aggressive expansion, the director's confidence, those are the key signals
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  about their strategy right now. It's high risk, high reward, clearly.
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  So wrapping this up, what does this all mean for you listening in?
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  This deep dive into ETC, it really throws a spotlight on the sheer audacity
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  and the cost involved when a company decides to completely change its core business.
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  And it leaves us with a big question, doesn't it? How much runway,
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  really, both in terms of cash and just time, does a company need to pull off
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  such a radical strategic pivot?
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  Especially jumping into a market like live streaming e-commerce that's known
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  for being fast growing, but also fiercely competitive.
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  And doing it all with that qualified opinion from the auditors hanging over
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  them adds another layer of complexity and pressure. Absolutely.
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  It's a high stakes bet on building an entirely new future. Definitely one to one.