OTS Holdings Limited Addresses SIAS Queries on FY2025 Performance, Strategic Transformation, and Malaysia Halal Facility Expansion

OTS Holdings Faces Prolonged Challenges: Transformation Efforts, Malaysian Expansion, and Halal Play in Focus

OTS Holdings Limited has released its responses to queries from the Securities Investors Association (Singapore) regarding its FY2025 annual report, drawing attention to several operational, strategic, and financial developments that investors should closely monitor. The report comes after three consecutive years of losses and highlights the Group’s ongoing transformation strategy amid persistent industry headwinds.

Flat Revenue, Stubborn Headwinds, and Brand Challenges

The Group’s revenue for FY2025 remained broadly flat at S\$29.75 million, continuing a multi-year decline—down nearly 25% since FY2021—despite an inflationary environment that should have supported nominal growth. The modern trade (MT) segment, in particular, reported a 3.6% revenue drop, attributed to subdued consumer sentiment and fierce competition from supermarket house brands. This ongoing pressure has eroded margins and challenged the Group’s ability to regain market share.

Transformation Initiatives and Strategic Moves

OTS Holdings is in the midst of a significant transformation, including:

Export and E-commerce push: The Group is working to offset weak local sales by expanding into export and e-commerce channels, with some progress reported.
Reviewing underperforming entities: In Malaysia, poor-performing distributors have been discontinued, and accounts receivable collections strengthened.
Divestment of joint ventures: The Group exited its Delta Bridge Pte. Ltd. (Bulan Islands, Indonesia) JV after African Swine Fever halted production, resulting in losses and impairments.
Halal manufacturing expansion: Recognizing high labor costs in Singapore and Malaysia’s more internationally recognized Halal certification, OTS Holdings began setting up a Halal manufacturing facility in Malaysia in November 2023. This factory received Malaysia Halal certification in August 2025 and is nearing final approvals before ramping up operations.

Product Innovation and Brand Portfolio Developments

ANEW Plant-Based Brand: Launched in 2022, ANEW’s performance disappointed, with higher production costs and consumer reluctance to pay premiums resulting in negligible revenue contribution.
Fung Mei Acquisition: In February 2025, OTS acquired the Fung Mei brand (recipes and customer base) for S\$38,000. Management deemed this non-material and did not announce it on SGXNet. Fung Mei specializes in Hong Kong–style waxed meats, complementing OTS’s existing Chinese sausage offerings. The move is seen as strategic, targeting a different customer base at low investment risk, but may not materially shift Group revenues in the short term.

Capital Expenditure: Malaysian Factory and Halal Opportunity

OTS Holdings’ property, plant, and equipment surged by S\$4.6 million, mainly due to machinery and equipment for the new Malaysian Halal factory. Including deposits and capital commitments, the total investment is significantly higher. The Malaysian plant is four times the size of the Singapore Halal factory, offering future growth capacity and lower labor costs. Importantly, Malaysia’s Halal certification is expected to open doors to the global Muslim market, potentially unlocking new sales opportunities and cost efficiencies.

Cost Management, Marketing Spend, and Competitive Pressures

Advertising and Promotion: Expenses jumped 30% to S\$1.14 million, despite flat revenues, as management seeks to build brand awareness. The ROI on these marketing efforts is being closely monitored, with management avoiding expensive initiatives like TV ads.
Administrative Expenses: These rose 2.9%, and marketing/distribution costs increased 16.1%, reflecting the higher cost of doing business amid competitive pressures.

Internal Audit, Governance, and Risk Management

The Group outsources internal audit to Yang Lee & Associates, with the FY2025 review focusing on Malaysia’s sales, credit management, inventory, and cash management. No significant risks or control deficiencies were found. All Malaysian entities are covered in the audit, while the Philippines entity was excluded due to immaterial contribution (<1% of Group sales). The Audit and Risk Management Committee (ARMC) does not anticipate new material risks from the expanded PPE base in Malaysia and conducts annual asset sighting and security reviews.

Government Support and Grants

OTS Holdings received S\$203,000 in government grants and schemes in FY2025 (S\$220,000 in FY2024) and continues to explore such opportunities to strengthen capabilities and support regional expansion.

Shareholder Returns and Strategic Outlook

No dividends have been declared for three years due to sustained losses, with management focused on conserving cash and building a stronger foundation. The Group is undertaking a strategic review of brand positioning and retail strategy, tracking consumer behavior, and claims organizational agility via a flat structure. However, the effectiveness of transformation initiatives and new investments, particularly the Malaysian Halal factory, will be critical to restoring profitability and shareholder value.

Price-Sensitive Issues and Investor Watchpoints

Malaysian Halal Factory: The ramp-up and operationalization of the new plant, along with international Halal certification, could be a major catalyst for future revenue growth and margin improvement.
Ongoing Transformation: Potential divestments, cost restructuring, and export/e-commerce momentum could shift the Group’s financial trajectory.
Consecutive Losses and No Dividends: Investors should note the continued lack of shareholder returns, which may weigh on sentiment until clear signs of turnaround emerge.
Low-Materiality Acquisition: The Fung Mei brand purchase is unlikely to move the needle for revenues or share price in the near term.

Conclusion

OTS Holdings is at a critical juncture, betting on transformation, international Halal expansion, and cost discipline to revive growth. Investors should watch for updates on the Malaysian factory’s operational milestones, export market penetration, and any strategic shifts in brand and product portfolio. While risks remain, especially around sustained losses and competitive pressures, successful execution of its new strategies could be a game-changer for the Group’s fortunes.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. Changes in operational performance, regulatory approvals, and market conditions may significantly impact OTS Holdings’ financial results and share price.