Tat Seng Packaging Group Ltd: 1H2025 Interim Financial Results Analysis

Tat Seng Packaging Group Ltd, a leading manufacturer and seller of corrugated paper and packaging products in Singapore and China, released its condensed interim financial statements for the six months ended 30 June 2025. This article provides an in-depth analysis of the Group’s financial performance, dividend actions, and notable events, supported by clear data tables and insights relevant for investors.

Key Financial Highlights

Financial Performance Overview

• Revenue: The Group reported revenue of S\$111.1 million for 1H2025, a decrease of 12.7% YoY, mainly due to lower sales volumes in both Singapore (-9.3%) and China (-8.7%), competitive selling prices, and the weakening of RMB against SGD.
• Gross Profit: Gross profit fell by 19.0% YoY to S\$22.8 million, reflecting the double impact of lower volumes and pricing pressure.
• Net Profit: Net profit attributable to owners declined by 29.9% YoY to S\$7.09 million, largely due to the fall in gross profit and a drop in other income (down 41.2%, mainly due to lower government grants).
• EPS: Earnings per share fell in tandem with net profit by 29.9% YoY.
• Dividend: The interim dividend per share was cut to 1.0 cent (from 3.0 cents a year earlier), reflecting tighter profitability and possibly a more cautious outlook.

Cash Flow and Balance Sheet Analysis

• Operating Cash Flow: Net cash from operating activities improved to S\$8.1 million (from S\$5.8 million in 1H2024), driven by operating profit and better receivables collection.
• Investing Activities: The Group had net cash outflows of S\$5.6 million (vs. S\$8.7 million outflow last year), mainly due to net acquisitions of financial assets and property, plant and equipment.
• Financing Activities: Net cash outflows increased to S\$7.3 million, mainly due to a higher dividend payout and net loan repayments.
• Cash Position: Cash and cash equivalents (excluding pledged deposits) dropped to S\$84.3 million (from S\$88.8 million at end-1H2024), reflecting cash outflows and negative FX translation effects.
• Net Asset Value: NAV per share remained stable at S\$1.28 (rounded), showing the Group’s resilient balance sheet despite profit pressure.

Exceptional Items and Notable Expenses

• Loss on Fair Value of Financial Assets: S\$0.45 million loss recognized in 1H2025 (vs. nil last year), impacting net finance income.
• Other Income: S\$0.65 million, down from S\$1.10 million, largely due to lower government grants.
• Foreign Currency Translation: S\$4.8 million loss recognized in other comprehensive income due to RMB weakness, affecting total comprehensive income.
• Dividend Income: S\$0.14 million from equity investments (new for 1H2025).

Dividends

• Current Period: Interim ordinary dividend of S\$0.010 per share (tax exempt 1-tier), payable on 12 Nov 2025, record date 31 Oct 2025.
• Previous Periods: Interim dividend for 1H2024 was S\$0.030 per share; final dividend for FY2024 was also S\$0.030 per share.
• Dividend Payout Reduction: The interim dividend has been reduced by 67% YoY, in line with weaker earnings performance and a likely more cautious capital management approach.

Related Party Transactions & Unusual Items

• Related Party Transactions: Included \$563,532 in transactions with Tee Yih Jia Food Manufacturing Pte Ltd, an associate of a company director.
• No Share Buybacks or Dilution: No share buybacks, treasury transactions, or new share issuances during the period.
• Capital Commitments: S\$5.9 million contracted for purchase of property, plant, and equipment, not yet recognized in the financials.

Macroeconomic and Industry Commentary

• The Group acknowledges continued headwinds from US-China trade tensions and excess capacity in the Chinese corrugated packaging sector, leading to ongoing intense price competition.
• Weaker RMB against SGD and competitive pricing have directly impacted reported revenues and margins.
• Management signals vigilance in cost control, operational efficiency, and credit risk, but does not provide a forecast.

Chairman’s/Management Statement

“The Group will continue to monitor the evolving situation closely. To overcome these challenges, the Group remain vigilant in managing credit exposure and maintaining a healthy financial position. The Management will continue to drive the Group’s business performance by enhancing human capital development and executing improvement strategies in terms of cost management, enhancing operational efficiency and boosting productivity.”

The tone is measured and pragmatic, highlighting operational discipline rather than optimism.

Overall Assessment and Outlook

Tat Seng Packaging Group Ltd’s 1H2025 results reflect a challenging operating environment, particularly in China, with marked declines in revenue, profit, and dividend payout. The Group retains a solid balance sheet and reasonable levels of liquidity. However, ongoing industry overcapacity, pricing pressure, and adverse FX movements are likely to persist in the near term.

Investor Recommendations

• If you are currently holding the stock:
  • Consider holding if your investment horizon is long-term, given the company’s strong balance sheet and continued dividend (albeit reduced).
  • If your investment thesis was based on growth or high yield, reassess in light of the sharp profit and dividend decline.
  • Monitor upcoming quarters for stabilization in China and signs of margin recovery before increasing exposure.
• If you are not currently holding the stock:
  • Wait for clearer signs of earnings stabilization, margin improvement, or a positive change in industry conditions before initiating a position.
  • Those seeking stable dividends may wish to observe if the lowered payout is temporary or a new norm.

Disclaimer: This analysis is based strictly on information contained in the company’s 1H2025 interim financial report and does not constitute investment advice. Please consult your financial advisor and consider your own risk tolerance and objectives before making investment decisions.

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