Astaka Holdings Limited Financial Analysis: Net Profit Decline of RM13.40 million for the Nine-Month Period Ended 30 September 2024

Business Description

Astaka Holdings Limited is incorporated in the Republic of Singapore and is listed on the Catalist Board of the SGX-ST. The principal activity of the Company is investment holding, while the Group is primarily involved in property development. The company operates mainly in Malaysia, with its key developments including The Astaka @ One Bukit Senyum and The Aliva @ Mount Austin.

Industry Position

Astaka Holdings operates within the property development industry in Malaysia. The company faces competition from other property developers in the region. Its market share and competitive position are influenced by its strategic landbanks and the quality of its property developments.

Revenue Streams and Customer Base

The company’s revenue is primarily derived from the sale of development properties. The customer base includes both local and foreign buyers, particularly from Singapore. The company’s supply chain involves various contractors, consultants, and sub-contractors for its construction projects.

Financial Statement Analysis

Income Statement

The Group reported a significant net loss of RM13.40 million for the nine-month financial period ended 30 September 2024, compared to a net loss of RM3.77 million in the corresponding period in 2023. Revenue decreased by 15.4% from RM41.58 million to RM35.19 million, while the gross profit dropped by 61.9% to RM3.61 million. Gross loss for the third quarter was RM1.32 million due to additional allowance for foreseeable losses on the carrying value of the unsold units in Bukit Pelali @ Pengerang (BPP).

Balance Sheet

The Group’s total assets decreased to RM247.05 million as at 30 September 2024 from RM273.45 million as at 31 December 2023. Development properties decreased by RM18 million due to sales of completed properties and foreseeable losses on unsold units. Cash and cash equivalents decreased by RM6.23 million due to payments made to trade and other payables.

Cash Flow Statement

The net cash used in operating activities was RM4.38 million, primarily due to the net loss and repayments made to trade and other payables. Net cash used in investing activities was RM1.52 million, mainly for the acquisition of property, plant, and equipment and deposit paid for land acquisition. Net cash used in financing activities was RM0.84 million, primarily due to repayments made to affiliated corporations and lease liabilities.

Key Findings

Strengths

• Strategic landbanks and high-quality property developments like The Astaka and The Aliva.
• Continued support from controlling shareholder and stakeholders, including financial support commitments.

Risks

• Significant net loss reported for the nine-month period ended 30 September 2024.
• Decrease in revenue and gross profit, indicating potential challenges in property sales and market conditions.
• Reduced cash and cash equivalents, which could impact liquidity.

Special Activities

The company is engaged in various activities to improve profitability, including new project developments like The Aliva @ Mount Austin, which is in its early stages of construction. The company has also entered into a term sheet for a proposed joint venture and sale and purchase of land to enhance its project pipeline.

Dividend Information

No dividend has been declared or recommended for the third quarter of FY2024.

Recommendations

For Current Stockholders

Given the significant net loss and decreased revenue, it may be prudent to hold the stock if you believe in the long-term potential of the company’s projects and the supportive actions from its controlling shareholder. However, closely monitor the company’s financial health and market conditions.

For Potential Investors

Consider carefully before investing due to the current financial performance, which includes a significant net loss and reduced cash reserves. Evaluate the potential of upcoming projects and the overall market conditions in Malaysia’s property sector before making a decision.

Disclaimer

This analysis is based on the unaudited financial statements of Astaka Holdings Limited for the period ended 30 September 2024. The recommendations provided are for informational purposes only and should not be considered as financial advice. Please consult your financial advisor before making any investment decisions.