Polaris Ltd Financial Analysis Report: Key Insights and Recommendations

Business Description

Polaris Ltd. (Company Registration No.: 198404341D) is incorporated in Singapore and listed on the Catalist of the Singapore Exchange Securities Trading Limited (SGX-ST). The company operates through several business segments, including:

• Pre-loved luxury goods: Importing and exporting pre-loved luxury goods and premium lifestyle products under the Mastro Luxe and ALLU brands in Singapore, Indonesia, the Philippines, South Korea, and South Africa.
• Consumer Electronics: Corporate sale of telecommunication, IT, and consumer electronics products in Singapore.
• Customer Services: After-market services such as equipment repairs, refurbishments, and technical services in Singapore.
• Green Protein Business: Cultivation and sales of black soldier fly larvae and its derivative products.
• Corporate: Group-level corporate services, treasury functions, and strategic investments in marketable securities and joint ventures in Southeast Asia.

Industry Position and Market Share

Polaris Ltd operates in diverse industry segments, each with its own competitive landscape. The pre-loved luxury goods segment is expanding in Asian markets, with significant operations in the Philippines and Indonesia. The consumer electronics segment is dominated by well-established brands, and Polaris Ltd collaborates with reputable names like Apple. The green protein business is a niche market with growth potential in sustainable agriculture and pet care sectors.

Revenue Streams and Customer Base

The company generates revenue primarily from the sale of pre-loved luxury goods, consumer electronics, customer services, and green protein products. The pre-loved luxury goods segment has shown significant growth, driven by increased purchasing outlets and export sales. The customer base spans individual consumers and corporate clients in multiple geographic regions.

Financial Statement Analysis

Income Statement

For the nine months ended 30 September 2024, Polaris Ltd reported an increase in revenue by 12.6% to S\$17.4 million, compared to S\$15.4 million in the same period in 2023. The gross profit rose by 54.0% to S\$2.6 million, indicating improved profitability in pre-loved luxury goods sales. However, the net loss narrowed to S\$1.0 million from S\$1.6 million in the prior year period.

Balance Sheet

As of 30 September 2024, the company’s total assets stood at S\$9.2 million, a decrease from S\$10.6 million as of 31 December 2023. This decline was mainly attributed to depreciation and decreased cash balances. Total liabilities decreased to S\$3.9 million from S\$4.2 million, primarily due to loan repayments.

Cash Flow Statement

Net cash used in operating activities was S\$0.9 million in 9MFY2024, an improvement from S\$3.3 million in 9MFY2023. The reduction in cash outflows was due to lower losses and improved working capital management. Net cash used in investing activities decreased to S\$35,000 from S\$152,000, while financing activities saw cash outflows of S\$0.4 million, consistent with the prior year.

Key Findings and Recommendations

Strengths

• Significant revenue growth in the pre-loved luxury goods segment.
• Improved gross profit margins.
• Effective cost management leading to reduced net losses.

Risks

• Ongoing net losses despite revenue growth.
• Decreased cash reserves impacting liquidity.
• Potential market volatility in the consumer electronics segment.

Special Activities and Actions

Polaris Ltd is expanding its pre-owned luxury goods business in Indonesia, the Philippines, and South Korea, and has established a new entity in Thailand. The company is also pursuing strategic alliances in the green protein industry to enhance its market presence.

Investment Recommendations

For Current Investors

If you currently hold shares in Polaris Ltd, it is recommended to hold your position. The company is showing signs of improvement in profitability and strategic expansion, which could yield positive results in the future.

For Potential Investors

If you do not currently hold shares in Polaris Ltd, it is recommended to wait and monitor the company’s performance over the next few quarters. While there are positive developments, the ongoing net losses and liquidity concerns warrant caution.

Disclaimer

This analysis is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consider their financial situation and investment objectives before making any investment decisions.

Report Date

The report is dated 13 November 2024 and covers the financial period for the nine months ended 30 September 2024.