Financial Analysis of Stamford Tyres Corporation: Net Profit Decline of 75.08%

Business Description

Stamford Tyres Corporation Limited is a Singapore-based investment holding company. Its core operations involve the wholesale and retail of tyres and wheels, the design and contract manufacturing of tyres for proprietary brands, tyre retreading, equipment trading, servicing of motor vehicles, and the manufacturing and sale of aluminium alloy wheels. The company operates across several geographic segments, including South East Asia, North Asia, and Africa, with a significant focus on South East Asia [[8]].

Industry Position

Stamford Tyres operates in a competitive industry characterized by intense competition and major geopolitical and macroeconomic challenges. The company competes with other regional and international tyre manufacturers and distributors. Its market share specifics are not detailed in the report, but the company’s diverse operations across multiple geographies suggest a broad market presence [[16]].

Revenue Streams and Customer Base

The company’s revenue streams primarily consist of the sale of tyres and wheels. The South East Asia segment accounts for the largest portion of its revenues, followed by North Asia and Africa. The company services a wide range of customers, including retailers and end-users, through its extensive distribution network [[9], [12]].

Financial Statement Analysis

Income Statement

The company reported a net profit of S\$0.4 million for the financial period ending 31 October 2024, a significant decline of 75.08% from the previous period’s S\$1.6 million. Revenue decreased by 1.2% to S\$94.5 million, primarily due to lower sales in South East Asia. Operating expenses rose by 3.9%, driven by increased staff costs and other operating expenses [[2], [3]].

Balance Sheet

The company’s assets increased, with property, plant, and equipment rising to S\$48.1 million due to new acquisitions in Indonesia. However, liabilities also increased, with trade payables and trust receipts growing to S\$63.9 million. The company’s cash and cash equivalents stood at S\$38.1 million as of 31 October 2024 [[4], [16]].

Cash Flow Statement

Net cash flows used in operating activities amounted to S\$11.9 million, compared to S\$12.1 million generated in the previous period. This was primarily due to increased borrowings for inventory funding. Cash flows from financing activities were positive at S\$17.7 million due to proceeds from long-term loans [[7]].

Dividend Information

No dividend has been declared for the current financial period. The total dividends paid in the prior period amounted to S\$4.7 million [[16]].

Key Findings

Strengths

• Diverse operations across multiple geographies.
• Increased property and equipment assets indicate expansion efforts.

Risks

• Significant decline in net profit by 75.08%.
• Increased liabilities and borrowings signal potential financial strain.
• Challenges in the operating environment due to geopolitical and macroeconomic factors [[16]].

Report Date and Period

The report is dated 13 December 2024 and covers the 6-month financial period ending 31 October 2024 [[17]].

Investment Recommendation

Based on the analysis:

• If currently holding the stock: Consider monitoring the company’s financial health closely due to the significant drop in net profit and increased liabilities. Evaluate the company’s ability to manage costs and improve profitability in the coming periods.
• If not holding the stock: Exercise caution before investing, given the current financial challenges and uncertain market conditions. Wait for signs of financial recovery or strategic actions aimed at improving profitability.

Disclaimer: This recommendation is based solely on the provided financial report and should not be considered as financial advice. Investors should perform their own due diligence and consult with a financial advisor before making investment decisions.

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