Analysis of Ascent Bridge Limited’s Financial Report with Net Loss Decline

Business Description

Ascent Bridge Limited is incorporated and domiciled in Singapore, focusing on investment holdings in the wholesale of alcoholic beverages. The company operates primarily in the distribution of alcoholic beverages and Changchang card sales, establishing a presence in 15 countries and partnering with 16 international airlines in the duty-free channel [[14]].

Industry Position and Competitors

Ascent Bridge Limited has established partnerships with leading international duty-free operators, including Lotte, King Power International, Dubai Duty-Free, Lagardère Travel Retail, and DFS Group. However, the company faces challenges with manpower and cash constraints, leading to reduced marketing activities [[4]].

Revenue Streams and Competitive Advantage

The company’s main revenue streams come from the sales of alcoholic beverages, with a shift towards duty-free channels. The customer base is international, with significant sales in Singapore, the Middle East, and the USA [[16]]. The company aims to leverage its partnerships with duty-free operators and airlines to gain a competitive advantage.

Financial Statement Analysis

Income Statement

The company reported a net loss of \$2.1 million for the period, showing a decrease from the previous year’s \$2.9 million loss, indicating a 27.5% improvement in net loss [[3]]. Revenue decreased by 48% to \$1.16 million, primarily due to reduced sales in duty-paid domestic markets [[4]].

Balance Sheet

As of 30 September 2024, Ascent Bridge Limited has total assets of \$31.95 million and total liabilities of \$3.92 million, resulting in net assets of \$28.02 million [[6]]. The company’s current ratio is strong at 3.83, although the cash ratio is low at 0.16, highlighting liquidity concerns [[14]].

Cash Flow Statement

The net cash used in operating activities narrowed significantly from \$4.0 million in the previous period to \$1.26 million [[13]]. The company secured a short-term loan to aid its financing needs [[12]].

Special Activities to Improve Profitability

The company has proposed a rights issue to raise up to S\$20.9 million to strengthen its financial position and support business expansion. Additionally, a proposed placement is underway to address short-term financing needs [[15]].

Key Findings

Strengths

• Established international partnerships in duty-free channels.
• Significant improvement in reducing net loss.
• Strong current ratio indicating good short-term financial health.

Risks

• Significant revenue decline due to reduced sales in domestic markets.
• Low cash ratio indicating potential liquidity issues.
• Dependence on successful capital raising activities to sustain operations.

Dividend Information

No dividend has been declared for the period ending 30 September 2024 due to a lack of retained earnings [[27]].

Investment Recommendations

For Current Shareholders

Hold: Given the company’s efforts to improve liquidity and reduce losses, it may be prudent to hold and observe the outcomes of the proposed rights issue and placement activities.

For Potential Investors

Caution: Consider the investment with caution, pending the successful execution of the proposed capital-raising activities and improvement in revenue streams.

Disclaimer

This analysis is based on the company’s financial report for the period ending 30 September 2024 and should not be considered as financial advice. Investors should perform their own due diligence before making investment decisions.

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