SunMoon Food Company Limited: 1H2025/26 Financial Analysis

SunMoon Food Company Limited, listed on the Singapore Exchange, has released its unaudited condensed interim financial statements for the half-year ended 30 September 2025. The report provides key insights into the Group’s operational performance, financial position, and outlook in a challenging market environment.

Key Financial Metrics and Performance

Historical Performance Trends

• Revenue Growth: The Group experienced a strong year-on-year increase in revenue (+17%), attributed to higher sales of fruits and non-hazardous chemical products, especially in the China market.
• Profitability: Gross profit and net profit both improved markedly. Gross margin rose to 4.3% from 1.6% a year earlier. The Group swung from a net loss of \$316,000 in 1H2024/25 to a net profit of \$61,000 in 1H2025/26.
• Cost Controls: Administrative expenses declined by 9% due to ongoing cost control measures, while selling and distribution expenses remained stable.
• Cash Flow: Net cash provided by operating activities increased to \$811,000 from \$637,000, reflecting improved working capital management.

Exceptional Earnings and Expenses

• Other Income: The Group recorded a one-off write-back of \$52,000 of long outstanding payables and \$97,000 in service fees from Yiguo.
• Foreign Exchange Impact: The Group saw a swing from net foreign exchange gains (\$220,000 in 1H2024/25) to losses (\$19,000 in 1H2025/26) due to currency fluctuations.

Related Party Transactions and Fund Flows

• Related Party Loans: An interest-free, unsecured loan of \$300,000 was provided by Enmore Technology Pte. Ltd., and a prior loan of USD100,000 (approx. \$134,000) was repaid during the period.
• Sales to YIGUO Group: Transactions with Shanghai YIGUO E-Commerce Co., Ltd and related entities accounted for 10.1% of revenue, up from 0.04% the year before.

Balance Sheet and Working Capital

• Assets: Cash and cash equivalents increased to \$2.10m, while inventories rose due to higher customer demand.
• Receivables and Payables: Trade receivables decreased as a result of better collections; trade payables increased due to higher purchase volumes and increased accruals for marketing expenses.
• Borrowings: Borrowings increased due to the new related party loan, while the bank loan remained unchanged at RMB3,000,000 (\$543,000).

Dividend Policy

• No dividend was proposed or paid for the current or previous periods. The Group remains in an accumulated loss position.

Chairman’s Statement and Outlook

“The market in China continues to be challenging due to weak consumer demand, and to improve revenue and profitability, the Group will continue to focus on the export of food products from China to the Southeast Asia markets and other markets. The Group will also continue its non-hazardous chemical business and import of Basha fish from Southeast Asia to China.”
— Mr Zhang Ye, Executive Director and Chief Executive Officer, 6 November 2025

The statement adopts a cautious but constructive tone, acknowledging ongoing market headwinds while outlining continued focus on export growth and product diversification.

Significant Business Events

• No natural disasters, legal disputes, or regulatory changes were disclosed.
• No share buybacks, placements, or dilution events occurred during the period.
• No divestments, IPOs, or major asset sales were reported.
• No changes in directors’ pay or remuneration were disclosed.
• No subsequent events were noted as having a material effect post-period.

Conclusion and Investment Recommendations

Performance Summary: SunMoon Food Company Limited delivered a positive turnaround in 1H2025/26, with strong revenue growth, a return to profitability, and improved cash flows. Cost control measures contributed to margin expansion, and related party support strengthened liquidity. However, the business remains exposed to foreign exchange volatility and ongoing challenges in the China consumer market.

Investor Advice:

• If you are currently holding the stock: The financials show encouraging signs of operational improvement and prudent financial management. Consider holding your position to observe if the revenue and profit momentum continues, especially as the Group executes on its strategy to grow exports and diversify product lines. Watch for sustained profitability and further cash flow improvements in subsequent quarters.
• If you are not holding the stock: The Group’s return to profit and improved margins are positive, but ongoing market and foreign exchange risk remain. Consider monitoring the stock for another quarter to confirm that this positive trend is sustainable and that the Group can maintain profitability. Entry may be considered if improvement persists and the company begins to generate consistent cash flow and profits.

Disclaimer: This analysis is based strictly on the contents of the company’s published interim financial statements and should not be construed as investment advice. Investors should consider their own risk appetite and conduct further due diligence before making any investment decisions.

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