Latest / Investor Exchange / Reclaims Global Limited FY2025 Results

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Reclaims Global Limited FY2025 Results · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Ever feel like you're just, you know, swimming in numbers trying to figure out
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  how a company's actually doing? Oh, absolutely. Financial reports can be dense.
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  Exactly. So today we're going to try to make it easier. We're diving deep into
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  Reclaims Global Limited.
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  Right. They're an eco-friendly player in the construction space,
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  recycling, excavation, logistics, that sort of thing.
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  And listed on the SGXST's Catalyst Board, basically a platform for growing companies. Correct.
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  We've got their official results for the year ending January 31st, 2025. That's FY 2025.
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  Our mission, to pull out the key insights for you, we want to understand their
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  performance, the why behind it, and what they're looking at going forward.
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  Yep. We'll do the heavy lifting, analyze the announcement so you get the picture
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  without wading through pages of data. Okay, let's get into it.
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  The big headline number first, revenue.
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  Looks like things were moving up. Moving up is putting it mildly.
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  They saw a massive jump, 82.7% increase overall.
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  Wow, 82.7%. That's huge. Yeah, from about S24.3 million dollars last year,
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  FY 2024, up to 44.4 million dollars in FY 2025.
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  And was that across the board or did one area really drive it?
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  Pretty much across the board, which is a good sign all the main business segments
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  grew. Okay, break that down for us. Sure.
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  So recycling, that was up 24.5%, about $1.1 million extra, bringing it to $5.774
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  million. That's all its growth. Definitely.
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  Then logistics and leasing, also strong, up 32.3%, which is S1.9 million dollars
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  more for a total of $7.977 million.
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  Good numbers. But you said overall growth was over 80%, so there must be a standout.
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  There absolutely is. The real powerhouse was excavation services.
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  Ah, okay. How much did that grow? Get this, 126.7% increase. Whoa.
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  Yeah, a $17.1 million jump. It brought their excavation revenue up to S30.521 million dollars.
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  That became their biggest segment by far. That's incredible growth in excavation.
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  It really is. The others category dipped a tiny bit, but it's negligible, really.
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  So why is such a massive surge, particularly in excavation, what did the company
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  say? They pinned it on stronger market demand, said it led to winning new projects.
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  So basically, the construction market was hot and they capitalized. Seems that way.
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  Suggests a really positive environment for them. You know, it does make you
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  wonder if it was just new projects or if maybe they could charge more,
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  too. The report doesn't quite detail that part.
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  Good point. OK, so revenue skyrockets.
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  Did profits follow suit? How did it impact the bottom line? Oh,
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  they absolutely did. Profitability looked really, really strong. Tell me more.
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  Profit before tax went up by, wait for it, 329.7%. Seriously, over 300%. Yeah.
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  From S1.5 million dollars in FY 2024 to S6.5 million dollars in FY 2025.
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  Okay, that's impressive. And profit from operations after tax also saw a huge leap.
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  Up 267.2% from roughly S1.5 million dollars to over 5.5 million dollars.
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  And for the shareholders, what about earnings per share?
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  That followed the trend. Basic and diluted EPS more than tripled.
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  Went from 1.16 Singapore cents to 4.25 cents. Fantastic results.
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  So what were the magic ingredients here? Obviously, the revenue boost helped.
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  That was the main engine, no doubt. More business usually means more profit.
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  But there was another really significant positive factor. Which was?
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  Their finance costs. They dropped dramatically.
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  Finance costs went down. How? Yeah, down by 83.3%, a huge drop.
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  83%? Why? Because they fully paid off their property loan and also their higher
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  purchase obligations during the year.
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  Less debt means less interest to pay. Ah, okay. That makes a big difference. A clean slate, almost.
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  Absolutely. That directly boosts profit. It's like taking a weight off.
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  Right. But it's never all good news, is it?
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  Were there any headwinds? Increased costs eating into those gains.
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  Yes, there were definitely some counterbalancing factors. The cost of materials,
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  services, consumables that went up quite a bit, 96.3%. And we doubled.
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  Okay, that's significant. It is. Now, some increase is expected when revenue goes up so much, right?
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  But it meant that cost, as a slice of the revenue pie, actually grew a little bit.
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  From 51.8% to 55.7%.
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  And why was that? They put it down to inflation, those general price pressures
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  we're seeing everywhere. Yeah, inflation's the story everywhere.
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  Any other cost increases?
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  A few things. Other gains decreased, mainly because they got less in government
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  grants this year compared to last.
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  Employee benefits expense also rose by 27.3%. They link that to just being busier,
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  more projects, maybe needing more staff or paying existing staff more.
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  Makes sense. And then other expenses were up too. Things like renting extra
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  equipment, machinery, higher dormitory costs for workers, vehicle upkeep, repairs.
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  Yeah. It all adds up. Right. Busy operations often mean higher running costs. Exactly.
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  And one more thing, other losses increased because they had to make a higher
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  provision for doubtful debts.
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  Meaning they set aside more money in case customers don't pay up. Precisely.
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  Suggests maybe a slightly higher
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  perceived risk of bad debt on those new contracts. So, a complex picture.
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  Great revenue, lower finance costs, but offset by rising operational costs and inflation. Yeah.
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  How did this play out in the profitability of each specific segment?
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  That's where it gets interesting. Recycling did well, profit-wise.
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  Went from about $594,000 to over S1.5 million dollars. Nice increase.
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  And excavation, mirroring its revenue explosion, saw profits soar from just
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  $216,000 last year to almost $5.2 million this year. Wow, okay.
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  That really turned around.
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  Hugely. But logistics and leasing actually saw its operating profit decrease.
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  Decrease. But didn't you say its revenue went up? I did, yeah.
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  Revenue was up 32%, but profit from operations dropped from S1.08 million dollars
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  down to F385,000 dollars. Huh.
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  Any idea why? Higher costs in that specific segment, maybe? That would be the logical assumption.
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  The report doesn't spell it out, but maybe higher fuel costs for their vehicles or maintenance.
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  Something squeezed the margins there despite the higher revenue.
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  It really shows you need to look past just the top line revenue,
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  doesn't it? Absolutely.
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  And the unallocated corporate costs also increase the loss slightly.
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  So yeah, segment performance tells a more detailed story. Okay, let's zoom out again.
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  What about the company's overall financial health? The balance sheet,
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  did it get stronger? It seems so, yes.
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  Total assets grew by 16.2% to $40.4 million.
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  Where did most of that growth come from? Mostly from current assets.
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  Things like cash, money owed by customers' receivables, and contract assets.
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  Those current assets jumped by over 25%. And non-current assets,
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  like buildings and equipment.
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  They increased slightly, about 1.0%. Mainly new equipment purchases offset by depreciation.
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  But the big story was the increase in those more liquid current assets.
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  More cash is generally good, right? Shows flexibility. Definitely.
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  Cash and cash equivalents specifically rose to $13.0 million.
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  What about the other side of the balance sheet? Liabilities, debt.
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  Total liabilities did go up by 33.0% to $6.7 million.
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  That was mainly driven by increases in what they owe, suppliers' trade payables,
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  and income tax they need to pay. But didn't you say they paid off loans?
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  Yes, and that repayment of loans and lease liabilities partially offset the
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  increase in payables. So the composition of liabilities changed.
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  Less long-term debt, more short-term obligations related to the higher activity levels.
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  Got it, and the overall equity, the company's net worth. That increased too,
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  up by 13.4% to S$33.8 million.
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  So assets grew more than liabilities, strengthening the equity position.
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  Okay. Any signs of improved efficiency in managing their working capital?
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  Like collecting cash faster?
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  Yes, actually. Some good improvements there. Trade receivables turnover got much better.
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  How much better? They went from taking an average of 106 days to collect cash
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  from customers down to just 67 days.
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  That's a significant improvement. Freeze up cash. Exactly.
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  And on the other side, trade payables turnover also improved.
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  They're paying their suppliers faster too, down from 64 days to 40 days.
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  Shows better cash management overall.
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  Good signs. And the net asset value per share. Also up.
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  From a 22.7 Singapore cents to 25.8 cents. Okay, so balance sheet looks stronger,
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  operations seem more efficient.
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  What about cash flow itself? Where did the cash come from? Where did it go?
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  They generated a lot more cash from their core operations this year.
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  Net cash from operating activities was $7.5 million.
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  That's a very healthy sign. Because the business is throwing off cash,
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  where did they deploy it?
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  They used about $1.9 million in investing activities, mostly buying new plant
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  and equipment, which supports future growth.
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  Investing back into the business, and financing. They used $2.1 million there.
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  That was mainly for paying dividends to shareholders and, as we discussed,
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  repaying those borrowings and lease liabilities.
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  Right, the dividends. You mentioned shareholders. Did they get a bigger slice
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  of the pie given the strong results? They did.
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  The board recommended a final dividend of 0.2 Singapore cents per share.
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  Add that to the interim dividend already paid and the total dividend for FY
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  2025 comes to 1.20 Singapore cents per share. And how does that compare to last year? It's an increase.
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  Last year, FY 2024, it was 1.00 Singapore cent per share.
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  So a nice little bump for investors. Suggests management feels confident about
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  the results and the future, enough to share more profit. That's usually the signal, yes.
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  All right. So that brings us to the future.
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  What's the outlook? What does the crystal ball say for Reclaims Global and their market?
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  Well, the official forecasts for the Singapore construction sector look pretty
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  positive. that Building and Construction Authority, the BCA,
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  is projecting strong demand for 2025.
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  How strong? They're estimating total construction demand between S-35 billion
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  dollars and S-39 billion dollars for the year.
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  That's a big number. Good news for companies serving that sector. Absolutely.
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  And they're even looking further ahead, projecting continued growth in the medium
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  term, like S-39 to S-46 billion dollars per year from 2026 to 2029,
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  mostly driven by infrastructure and housing projects.
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  A favorable wind blowing for the industry. It seems so based on those projections. However.
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  The company itself injects a note of caution. Oh. What are they concerned about?
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  They point to the usual suspects, geopolitical tensions, global economic uncertainties.
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  Things that could slow things down or delay projects, even with strong underlying demand.
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  Fair enough. External risks are always there. Right. So they're saying their
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  focus remains firmly on their Singapore operations for now.
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  They're being cautious about making any big new investment. Playing it safe,
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  consolidating the gains. Seems like it.
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  They emphasize staying vigilant, being ready to adapt if the global economic picture changes.
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  Prudent management, you could say. OK, so let's wrap this up.
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  If we boil it down, FY 2025 was clearly a banner year for Reclaims Global.
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  Definitely. Strong revenue growth, even stronger profit growth,
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  fueled mainly by that booming excavation segment.
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  And they tidied up the balance sheet, paid down debt, improved cash management.
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  Right. And shared some of that success with shareholders through a higher dividend.
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  But facing some rising costs due to inflation and higher activity levels. Yes.
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  Those were the main headwinds, alongside that dip in profitability for the logistics segment.
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  And looking ahead, the market forecast looks promising, but they're keeping
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  a washful eye on those wider economic risks. Exactly.
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  Strong local demand projected, but tempered with global caution.
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  It leaves you with a final thought, doesn't it? They had fantastic growth and
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  a strong market. But how much of that momentum can they maintain if,
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  say, those global economic uncertainties really start to bite?
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  Will that underlying construction demand in Singapore be enough to shield them,
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  or could things get tougher?
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  That's the key question going forward, isn't it?
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  Sustainability versus potential headwinds, something to watch.
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  Definitely. Well, hopefully this deep dive has given you a much clearer picture
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  of Reclaims Global's financial story and what might lie ahead without you needing
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  to sift through all the raw data yourself. Hope it was helpful.