Jawala Inc. FY2024 Financial Results Summary and Investor Insights

Date of the Report:

• 27 September 2024

Financial Year:

• Reporting for the financial year ended 31 July 2024.

Key Financial Highlights:

1. Revenue:

   • Decreased by 27% to RM 8.15 million in FY2024, down from RM 11.20 million in FY2023. The decrease is mainly attributed to delayed logging operations due to weak market demand and prices in the first half of FY2024.

2. Cost of Sales and Gross Profit:

   • Cost of sales decreased by 20% to RM 5.50 million in FY2024.
   • Gross profit decreased by 38% to RM 2.65 million in FY2024.
   • Gross profit margin dropped from 38% in FY2023 to 32% in FY2024, mainly due to lower average selling prices of logs.

3. Net Loss:

   • Jawala Inc. recorded a net loss of RM 2.68 million in FY2024, an increase from the net loss of RM 0.90 million in FY2023.

4. Cash Flow:

   • Net cash used in operating activities: RM 6.84 million.
   • Net cash used in investing activities: RM 11.83 million, primarily due to expenditures on biological assets and plantation infrastructure.
   • Net cash from financing activities: RM 8.08 million, mainly from the drawdown of a loan facility.

5. Assets and Liabilities:

   • Current Assets: Decreased from RM 28.75 million to RM 18.66 million, primarily due to a reduction in cash and bank balances.
   • Non-Current Assets: Increased significantly to RM 50.08 million, mainly due to biological assets.
   • Current Liabilities: Increased to RM 4.43 million, primarily driven by an increase in trade payables.
   • Non-Current Liabilities: Increased to RM 19.94 million, largely due to a rise in long-term borrowings.

6. Earnings Per Share:

   • Loss per share for FY2024 is (1.77) sen, compared to (0.72) sen in FY2023.

Dividend Announcement:

• No dividends were declared or recommended for FY2024 due to the loss recorded and strategic reserve requirements.

Special Activities or Actions to Improve Profitability:

• The company delayed logging and production operations in response to weak prices and demand in the timber market during the first half of FY2024 to mitigate potential losses.
• Focused on managing its cash reserves and maintaining strategic reserves in accordance with internal financial policies.

Notable Points for Investors:

1. Profitability: The company’s net loss increased due to reduced revenue and lower profit margins, indicating challenges in the timber market and pricing environment.
2. Cash Position: A significant decrease in cash and bank balances was noted, mainly attributed to ongoing investment in biological assets and infrastructure.
3. Biological Assets: These assets increased significantly, reflecting the company’s focus on forest plantation activities.
4. Borrowings: The company increased its borrowings to finance plantation activities, which investors should monitor as it may affect future cash flows and financial health.

Recommendations:

• For Current Shareholders:
  • Consider holding the stock if you have a long-term investment horizon and believe in the company’s strategic forest plantation activities. However, it’s important to monitor the company’s ability to manage cash flow, reduce losses, and respond to market conditions.
• For Potential Investors:
  • Exercise caution and conduct a thorough analysis before investing. The company is currently experiencing losses and its performance is subject to market conditions in the timber industry.

Disclaimer:

• This summary and recommendation are based on the unaudited financial statements of Jawala Inc. as of 31 July 2024. Investors should perform their own due diligence and consider their financial situation before making investment decisions.