Incredible Holdings Ltd: Financial Analysis – Net Loss Decline by 54.10%

Business Description

Incredible Holdings Ltd. is incorporated and domiciled in Singapore. The company is primarily engaged in the following activities:

• Distribution of specialty chemical products, consumable materials, films, and spare parts for the electronic industry.
• Trading of luxury goods.
• Loan financing business.

The company operates mainly in the Asia-Pacific region, including the People’s Republic of China (PRC) and Denmark. The principal activities of the company include providing management and accounting services to its subsidiaries and investment holding.

Industry Position, Competitors, and Market Share

Incredible Holdings Ltd. is positioned within diverse sectors, including the distribution of specialty chemicals, luxury goods trading, and loan financing. The company faces competition from other luxury goods traders and distributors in the Asia-Pacific market, particularly in Hong Kong and mainland China. The competitive landscape is fierce due to the resurgence of luxury spending and the growing dominance of these markets.

Revenue Streams, Customer Base, Supply Chain, and Competitive Advantage

The company’s revenue streams are diversified across three main business segments: luxury goods trading, distribution of specialty chemicals, and loan financing. The customer base includes retail consumers, wholesale customers, and corporate clients. The supply chain for luxury goods is heavily influenced by market demand and competition, while the distribution business relies on maintaining strong relationships with electronic manufacturers. The primary competitive advantage lies in the company’s diversified business model and geographic reach.

Financial Statements Analysis

Income Statement

For the three-month period ending 30 September 2024, the company reported a significant decline in revenue by 94.96%, from S\$2,065,000 in 2023 to S\$104,000 in 2024. Despite this, the gross profit increased by 62.50% to S\$13,000 due to a notable reduction in the cost of sales [[3]]. However, the company reported a net loss of S\$222,000, which is a 54.10% improvement from the net loss of S\$512,000 for the same period in the previous year [[3]].

Balance Sheet

As of 30 September 2024, the company’s total assets stood at S\$20.009 million, a slight decrease from S\$20.215 million as of 30 June 2024. Non-current assets remained relatively stable, with a minor decrease attributable to depreciation [[4]]. Current assets saw a decline primarily due to reduced trade and other receivables and cash equivalents [[4]]. Total liabilities decreased marginally, with a significant portion of non-current liabilities consisting of loan payables [[4]].

Cash Flow Statement

The net cash used in operating activities was S\$22,000 for the three months ending 30 September 2024, mainly due to changes in working capital [[7]]. There were no cash flows from investing activities, while financing activities resulted in a net outflow of S\$6,000 due to lease liability repayments [[7]]. Overall, cash and cash equivalents decreased by S\$28,000, leaving a balance of S\$19,000 as of 30 September 2024 [[7]].

Dividend

No interim dividend has been declared or recommended for the three months ending 30 September 2024 [[17]].

Key Findings

• Revenue Decline: The company experienced a significant decline in revenue, primarily due to reduced customer demand and intense market competition [[3]].
• Increased Gross Profit: Despite the revenue drop, the company achieved a higher gross profit margin due to a reduction in the cost of sales [[15]].
• Operating Loss: The operating loss before working capital changes was S\$141,000, reflecting the company’s ongoing challenges [[16]].
• Stable Non-Current Assets: Non-current assets remained stable, with minor decreases due to depreciation [[4]].
• Decreased Liabilities: Total liabilities saw a marginal decrease, with loan payables being a significant component of non-current liabilities [[4]].

Special Activities or Actions

The company is focusing on exploring new customers in Singapore and overseas for its distribution segment and expanding operations in other geographical areas for its luxury goods segment [[17]].

Investment Recommendations

For Current Investors

Given the company’s significant revenue decline but improved gross profit margin, current investors should hold onto their stock. The management’s efforts to explore new markets and customers could potentially yield positive results in the future. However, investors should closely monitor the company’s progress and market conditions.

For Prospective Investors

New investors should exercise caution and consider the company’s current financial challenges and market competition. It may be prudent to wait for more stable financial performance and clearer signs of successful market expansion before investing.

Disclaimer

This analysis is based on the financial statements provided and is intended for informational purposes only. Investors should consider their own financial situation and consult with a financial advisor before making any investment decisions.

Report Date

The financial report is dated 13 November 2024 and covers the three-month period ending 30 September 2024 [[19]].