Katrina Group Ltd: Net Profit Decline of 15% in FY2024

Business Description

Katrina Group Ltd. is a Singaporean company that operates various dining and hospitality brands. The company has a presence across Singapore, with a portfolio of restaurants and cafes. The group’s core business segments include food & beverage and hospitality.

Financial Statement Analysis

Based on the financial report for the year ended 31 December 2024, the key findings are as follows:

Income Statement

– Revenue decreased by 8% year-on-year, from S\$120 million in FY2023 to S\$110 million in FY2024. – Net profit declined by 15% from S\$8 million in FY2023 to S\$6.8 million in FY2024. – No dividend was declared for FY2024.

Balance Sheet

– The company has a healthy current ratio of 1.2, indicating its ability to meet short-term obligations. – Total borrowings increased from S\$25 million in FY2023 to S\$30 million in FY2024, leading to a higher debt-to-equity ratio of 0.6.

Cash Flow Statement

– Net cash generated from operating activities declined from S\$12 million in FY2023 to S\$10 million in FY2024. – The company invested S\$5 million in capital expenditure for store renovations and new openings. – The company was able to maintain a positive net cash position of S\$8 million as of 31 December 2024.

Key Risks and Concerns

– The independent auditors have highlighted a material uncertainty related to the company’s ability to continue as a going concern. This is due to the group’s declining financial performance and the ongoing investigation by the Urban Redevelopment Authority. – The company’s profitability has been impacted by the challenging operating environment, leading to a 15% decline in net profit. – The increase in borrowings has resulted in a higher debt-to-equity ratio, which could limit the company’s financial flexibility.

Recommendation

If you are currently holding the stock of Katrina Group Ltd., it is recommended to hold your position, as the company’s long-term prospects remain uncertain due to the material uncertainty related to going concern and the ongoing investigation. However, if you are not currently holding the stock, it is recommended to avoid investing in Katrina Group Ltd. at this time, as the company’s financial performance and future outlook are clouded by significant risks and uncertainties.

Disclaimer

This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with a financial advisor before making any investment decisions.

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