Emerging Towns & Cities Singapore Ltd. (ETC): Q2 & H1 2025 Financial Analysis

Emerging Towns & Cities Singapore Ltd. (“ETC”) has released its unaudited condensed interim financial statements for the second quarter and six months ended 30 June 2025. The company, listed on the Catalist board of SGX, has undergone significant changes, including the disposal of its Myanmar operations and a strategic pivot toward live streaming e-commerce in China.

Key Financial Metrics and Comparative Performance

Historical Performance Trends

The Group’s revenue surged in H1 2025 to S\$5.8 million, up from S\$2.2 million in H1 2024. This increase was attributed to the full six-month contribution from its China live streaming e-commerce segment, compared to only three months in the prior year. The transition away from Myanmar property and rental income (now classified as discontinued operations) marked a major strategic shift. Net profit rebounded sharply in Q2 2025, reversing substantial losses in the comparative periods.

Divestments and Corporate Actions

• Myanmar Divestment: The Group completed the sale of DAS Pte. Ltd. (holding its Myanmar assets) on 26 December 2024, with proceeds of S\$4 million, received in tranches. This divestment removed the loss-making Myanmar segment and the Group’s comparative statements have been restated to reflect discontinued operations.
• China Expansion: In H1 2025, ETC incorporated 15 new subsidiaries in China to support its e-commerce operations and acquired Sichuan Jiyu Technology Co., Ltd. The company now operates 52 subsidiaries focused on live streaming, offline and online sales of consumer foods, snacks, health foods, supplements, and condiments.
• Fundraising: In July 2025, ETC completed a S\$4.5 million bond issuance and granted options to management for 239 million shares. This could result in up to 22.4% dilution if all convertibles are exercised.

Exceptional Items and Expenses

• The group reported a gain on disposal of subsidiaries (S\$149,000) and rental income from its new China operations.
• Marketing and advertising expenses rose significantly, in line with sales growth in the e-commerce sector.
• Depreciation and staff costs also increased due to the expansion of premises and workforce for the e-commerce business.

Cash Flow Analysis

Operating cash flow for H1 2025 was negative (S\$490,000 used), reflecting high operating expenses and investment in working capital. Investing activities used S\$463,000, mainly for capital expenditure. Financing cash flows were negative S\$425,000, mainly due to lease payments. Cash and cash equivalents fell from S\$5.47 million at December 2024 to S\$4.09 million at June 2025.

Macroeconomic and Industry Commentary

The Chairman’s Statement notes:

“China’s economy expanded by 5.3 percent year-on-year in the first half of 2025, outperforming expectations and reflecting the country’s steady recovery momentum amid a volatile global environment. Online consumption continued to be a powerful driver of retail growth. In the first half of the year, total online retail sales reached RMB 7.43 trillion (US\$1.01 trillion), up 8.5 percent year-on-year… Livestreaming has been a popular channel for China consumers purchasing health foods in the recent years, and product advertisement in mini dramas could become the next big thing… Barring any unforeseen circumstances, which include a deterioration of China’s macroeconomic environment, the Directors expect the Group to be profitable for the full year of 2025.”

The tone is optimistic, highlighting strong Chinese macro trends and the strategic fit of ETC’s new business model.

Dividend Policy

No dividend was declared for H1 2025, nor in the previous periods. Management intends to conserve cash for working capital requirements, especially given rapid business expansion and negative operating cash flow.

Share Capital, Dilution and Options

• 982 million shares outstanding; up to 205 million convertible loan shares and 15 million options remain potentially dilutive (total possible dilution 22.4%).
• No share buybacks, treasury shares, or subsidiary holdings in the parent.

Audit Qualifications and Resolution

ETC’s previous audit was subject to a qualified opinion due to comparative balances and discontinued operations. The board confirms all outstanding audit issues have been disclosed and resolved.

Outlook

Management expects ETC to remain profitable for the full year 2025, barring unexpected macroeconomic deterioration in China. The company is now wholly focused on China’s fast-growing e-commerce sector, especially live streaming and health foods—segments highlighted for robust growth.

Conclusion and Investment Recommendations

Overall Financial Performance: ETC has executed a successful turnaround by divesting its legacy Myanmar operations and scaling up in China’s booming e-commerce sector. Revenue and profit have rebounded strongly YoY and QoQ, with operational metrics improving in line with the new strategy. However, negative operating cash flow and substantial dilution risk from new bonds and options should be noted.

• If you are currently holding ETC shares: Consider maintaining your position given the strong revenue growth, return to profitability, and positive industry outlook in China. However, monitor the company’s cash flow health and future dilution, as these could weigh on share price if unresolved.
• If you are not currently holding ETC shares: ETC may present an interesting entry opportunity as a turnaround play in a high-growth sector. Wait for further confirmation of sustainable profitability and improvements in operating cash flow before taking a position. Evaluate the impact of management bond and option issuance on future share price.

Disclaimer: This analysis is based solely on the disclosed financial statements and management commentary. It does not constitute investment advice. Investors should conduct their own due diligence and consider their risk tolerance before making any investment decisions.

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