World Precision Machinery Limited: 1H 2025 Financial Analysis and Outlook

World Precision Machinery Limited (“the Group”), a Singapore-incorporated manufacturer of stamping machines and metal parts, has released its unaudited condensed interim financial statements for the six months ended 30 June 2025. This article analyzes key financial metrics, recent trends, management statements, and strategic considerations for investors based on the company’s latest disclosures.

Key Financial Metrics and Performance Review

Note: N.M. denotes Not Meaningful due to negative profit figures in the latest period.

Historical Performance and Trends

• Revenue: For 1H25, revenue declined 16.5% year-over-year to RMB 356.8 million, with Q2 2025 revenue down 28.4% YoY and 5.6% QoQ, reflecting a continued slowdown in sales, particularly in high-performance stamping machines.
• Profitability: The Group swung from a net profit of RMB 10.0 million in 1H24 to a net loss of RMB 11.9 million in 1H25, driven by weaker sales and higher other expenses (notably foreign exchange losses).
• Gross Margin: Gross profit margin for 1H25 rose slightly to 18.3% (from 17.3% in 1H24), but margin deteriorated in Q2 2025 to 17.9% (down 1.4 percentage points YoY).
• Operating Expenses: Distribution and selling expenses fell by 28.1% YoY, administrative expenses by 4.4% YoY, reflecting cost control measures in response to lower sales volumes.
• Dividend: No interim dividend was declared for 1H25; in comparison, the previous year’s interim dividend was RMB 0.37/share.
• Net Asset Value: NAV per share was RMB 2.2650 as of 30 June 2025, down slightly from RMB 2.2746 at end-2024.

Exceptional Items and Notable Transactions

• Foreign Exchange Losses: Other expenses surged to RMB 9.5 million in 1H25 from a gain of RMB 6.7 million in 1H24, primarily due to foreign currency losses.
• Asset Acquisition: The Group acquired Hainan Xingmei Spring Hotel Co., Ltd. (investment property) for RMB 150 million, contributing to a significant increase in investment properties and related depreciation expenses.
• Related-Party Transactions: The Group reported significant sales and purchases with associates of the controlling shareholder, totaling over RMB 127 million in 1H25. These transactions were conducted under shareholder mandates.
• Bank Borrowings: The Group maintained RMB 235 million in short-term, secured bank loans, all refinanced by due dates, with collateral provided mainly by associates related to the Executive Chairman.

Directors’ Remuneration

• Directors of the Company: Total remuneration for 1H25 was RMB 1.52 million, stable compared to 1H24.
• Other Key Management: Total remuneration for 1H25 was RMB 1.60 million, down from RMB 2.18 million in 1H24.

Chairman’s Statement and Strategic Outlook

“The financial year ending 31 December 2025 (“FY2025”) will be a challenging year for the Group, with the PRC’s domestic economy still hampered by sluggish consumer and business sentiment, while international geopolitical conflicts, including the Russia-Ukraine War, the Israel-Hamas conflict and significant increase in USA tariff, continues a more unstable external environment. As a result of these various pressures, the Group’s business outlook will remain subdued in FY2025.
The management is monitoring the development of the business environment closely and will adjust its existing business strategies to better mitigate these challenges.
The Group’s order book stood at RMB213.1 million as at 8 August 2025.”

Tone: The statement is cautious and negative, highlighting ongoing macroeconomic and geopolitical headwinds, as well as uncertainty in both domestic and global demand.

Other Corporate Actions and Events

• No share buybacks, rights issues, or placements took place during the period. The total share count remains at 400 million ordinary shares, with no treasury shares or outstanding convertibles.
• No interim dividend declared for 1H25, a notable departure from the previous year.
• The Group completed the acquisition of hotel assets, signaling ongoing diversification, but this also increased the group’s depreciation and investment property expenses.

Cash Flow and Balance Sheet Highlights

• Net cash from operating activities for 1H25 was RMB 38.6 million, down from RMB 21.4 million in 1H24, indicating improved working capital management despite weaker earnings.
• Investing activities led to a cash outflow of RMB 101.5 million, primarily due to the hotel asset acquisition.
• Financing activities saw a net outflow of RMB 10.4 million, with no dividends paid and refinancing of short-term borrowings successfully completed.
• Cash and cash equivalents as at 30 June 2025 stood at RMB 187.4 million, providing a buffer for ongoing operations despite a net current liability position.

Risks, Unusual Items, and Related-Party Activities

• The Group faces ongoing risks from macroeconomic uncertainty in China, geopolitical tensions, and currency volatility.
• Significant related-party transactions, while under mandate, remain a structural risk.
• There were no legal disputes, asset revaluations, or provisions for natural disasters during the period.

Conclusion and Investor Recommendations

Overall Assessment: World Precision Machinery Limited’s 1H25 performance is weak, marked by a sharp decline in revenue, a swing to net loss, and the absence of an interim dividend. The Group’s outlook remains subdued, with the Chairman explicitly warning of continued challenges from both domestic and global headwinds. While the balance sheet remains liquid and bank refinancing continues smoothly, the core business is under pressure and diversification into hospitality has yet to show meaningful returns.

Recommendations

• If you are currently holding this stock:
  
  
  Consider reducing your position or holding only if you have a high-risk tolerance and a long-term outlook. The near-term prospects are weak, and there is no interim dividend to provide downside support. Close monitoring of quarterly developments is advised.
  
• If you are not currently holding this stock:
  
  
  It may be prudent to stay on the sidelines until there is clear evidence of a turnaround in sales momentum, profitability, or a more constructive macroeconomic environment. The current risk/reward profile is unfavorable.
  

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult a professional before making investment decisions.

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