Samurai 2K Aerosol Limited: Net Profit Decline Analysis

Business Description

Samurai 2K Aerosol Limited is an investment holding company with subsidiaries engaged in manufacturing and selling aerosol spray paints and related materials. The company operates in several geographic locations, including Malaysia, Indonesia, the United States, Singapore, and India. The business segments include standard paint, premium paint, and maintenance and other products.

Industry Position

The company operates within the aerosol spray paint industry, competing with other manufacturers and suppliers of paint products. While specific competitors are not mentioned, the company’s market presence spans multiple countries, indicating a diverse market reach.

Revenue Streams and Customer Base

The company generates revenue primarily through the sale of aerosol spray paint products. For the six-month period ended September 30, 2024, revenue increased by 17.47% to RM46.68 million, driven by higher demand in all markets, particularly Indonesia and Malaysia [[23]].

Financial Statement Analysis

Income Statement

• Net Loss: The company reported a net loss of RM10.021 million for 1H2025, compared to a profit of RM2.779 million in 1H2024, primarily due to inventory and fixed asset write-offs from a fire incident [[2]].
• Revenue: Increased by 17.47% to RM46.68 million.
• Cost of Sales: Increased by 26.04%, reflecting higher purchases aligned with sales growth.
• Administrative and Marketing Costs: Administrative expenses increased by 11.04%, while marketing expenses significantly decreased by 82.80% due to reduced offline marketing activities [[24]].

Balance Sheet

• Total Assets: Decreased to RM130.188 million as of September 30, 2024, from RM131.789 million as of March 31, 2024 [[3]].
• Total Liabilities: Increased slightly to RM62.639 million, driven by increased trade payables and borrowings [[25]].
• Net Assets: Decreased to RM67.549 million as of September 30, 2024 [[4]].

Cash Flow Statement

• Operating Cash Flow: Net cash generated from operating activities was RM2.09 million [[5]].
• Investing Activities: Net cash used was RM2.21 million, mainly for purchasing plant and machinery [[25]].
• Financing Activities: Net cash inflow of RM0.87 million due to bank borrowings [[25]].

Dividend Information

No dividend has been declared or recommended for 1H2025 or 1H2024 [[26]].

Key Findings

• Strengths: Revenue growth in key markets, especially Indonesia and Malaysia.
• Risks: Significant net loss due to asset write-offs from a fire incident, and increased cost of sales.

Special Activities

The company is focusing on achieving a leaner cost structure and introducing innovative products to maintain competitiveness. Recovery efforts from the fire incident have resumed full operations as of August 2024 [[26]].

Investment Recommendations

If Currently Holding the Stock:

Consider holding the stock as the company has resumed full operations post-incident and is working on cost optimization strategies. However, remain cautious due to recent losses and monitor future developments closely.

If Not Currently Holding the Stock:

Prospective investors should consider waiting for clear indications of financial recovery and successful insurance claims related to the fire incident before investing.

Disclaimer

This analysis is based on the financial report provided and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.

Report Date

The financial report is for the six-month period ended September 30, 2024, and was disclosed on November 14, 2024 [[27]].

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