EuroSports Global Limited 1HFY2026 Financial Analysis: Navigating Headwinds and Strategic Transformation

EuroSports Global Limited (“ESG”) has released its unaudited condensed interim financial statements for the six months ended 30 September 2025 (“1HFY2026”). The report covers the Group’s automotive distribution business, sustainable mobility (electric motorcycles), and other ancillary activities. Below, we unpack the key financial metrics, performance trends, and strategic highlights for investors.

Key Financial Metrics and Performance Highlights

*Inferred/estimated from half-yearly data; actual quarterly figures not separately reported.

Historical Performance Trends and Business Review

• Revenue & Segment Trends: Revenue fell 34.4% YoY to S\$19.28 million due to a 36.3% drop in automobile sales, attributed to market headwinds and tax-related demand suppression. Merchandise, parts, and servicing also declined by 11.0%. Lamborghini sales remained the mainstay, accounting for 87% of total revenue.
• Gross Profit & Margin: Although gross profit dropped 6.2% YoY, gross margin rose from 12.4% to 17.8%—reflecting a focus on higher-margin sales amidst lower volumes.
• Net Loss & EPS: Net loss narrowed significantly by 66.2% YoY, from S\$4.31 million to S\$1.46 million, and EPS improved from (1.59) cents to (0.59) cents, mainly due to cost controls, lower impairment charges, and reduced administrative expenses.
• Other Income: Other income doubled, bolstered by higher sales incentives from manufacturers as sales activity recovered slightly.
• Operating Expenses: Administrative expenses dropped by 34.9% due to cost-cutting in the electric motorcycle subsidiary and tighter expense management. Marketing spend also fell sharply.
• Finance Costs: Finance costs surged by 82.7% due to increased short-term borrowing for working capital and sustainable mobility investment.
• Cash Flow & Liquidity: Net cash used in operating activities was S\$4.95 million, reflecting working capital outflows from increased inventories and prepayments. Cash and cash equivalents (unrestricted) at period end stood at just S\$220,000, with S\$4.8 million pledged as security deposits for banking facilities.
• Balance Sheet: The Group remained in a net current liabilities position (current liabilities exceeded current assets by S\$6.8 million), raising going concern risks, but management remains confident of refinancing and future cash flows.

Dividends

• No dividend was declared for 1HFY2026 or the comparable period last year. The Group continues to conserve cash for operations and future investments.

Share Buybacks, Fundraising, and Capital Actions

• ESG bought back 611,000 shares in the period, holding 12 million treasury shares (4.74% of issued shares). In July 2025, it sold 10 million treasury shares, raising S\$1.8 million.
• Convertible bonds of S\$3.3 million remain outstanding, with options for conversion into ESG or subsidiary shares.
• Net proceeds from loans and the sale of treasury shares were used to fund operations and business development.

Business Developments and Strategic Outlook

• Automobile Distribution: The luxury car segment faces ongoing demand headwinds from macroeconomic uncertainty, elevated taxes, and cautious consumer sentiment. However, ESG is benefiting from strong order books for the Lamborghini Urus SE and recently launched Lamborghini Temerario, expecting positive momentum as new models arrive.
• Sustainable Mobility: The electric motorcycle subsidiary (SEC) achieved European Whole Vehicle Type Approval for its Lambda Scorpii model and gained visibility through participation in Singapore’s SG60 National Day Parade. Mass production and deliveries are targeted for 2027, with distribution networks being established in Asia and Europe.

Chairman’s Statement and Tone

“The luxury automotive sector continues to operate in a challenging environment, shaped by persistent global economic uncertainty and elevated automotive taxation in the local market… Despite these near-term headwinds, the Group remains resilient and well-positioned within the competitive landscape. Our strong order book continues to underpin performance, supported by robust demand for the newly introduced Urus SE… Looking ahead, while macroeconomic and regulatory challenges are likely to persist, the Group remains confident in its strategic direction and operational agility. Supported by a diversified and electrified product range, sustained brand desirability, and disciplined cost management, we are well-equipped to navigate market uncertainties… The next 12 months are expected to present both challenges and opportunities, and the Group is committed to sustaining growth and delivering long-term value for shareholders.”

The Chairman’s tone is cautiously optimistic, acknowledging headwinds but emphasizing strategic resilience and a positive outlook based on new product launches and cost discipline.

Significant Risks, Events, and Audit Issues

• The Group’s auditors previously issued a qualified opinion over the recoverability of intangible assets, prepayments, and amounts due from its electric motorcycle subsidiary. Management is reassessing these balances, but there are still material uncertainties about asset recoverability and going concern.
• No dividends, major related-party transactions, or legal disputes were reported this period.
• No new material events after the reporting period were disclosed.

Conclusion and Investment Recommendations

Overall Assessment: ESG’s 1HFY2026 results show continued operating losses but with significant improvements in cost control and a narrowing of net losses. Liquidity remains tight and the Group is still in a net current liability position, but management is pursuing refinancing, fundraising, and a strategic pivot towards electric mobility. The luxury auto distribution business faces demand headwinds, though the launch of new models could provide upside. The electric motorcycle business remains in pre-revenue development, with mass production targeted for 2027.

Recommendations for Investors

• If you are currently holding the stock: Maintain a cautious hold. The Group has stemmed its losses and is managing costs, but faces ongoing liquidity pressures, qualified audit issues, and a difficult market environment. Hold for long-term strategic upside from its electric mobility pivot, but monitor quarterly cash flows, asset recoverability, and new model deliveries closely.
• If you are not currently holding the stock: Consider waiting on the sidelines. ESG’s risk profile remains high due to recurring losses, weak liquidity, and uncertainty over the value of its electric motorcycle business. Only consider entry if business momentum for new auto models materializes and the Group demonstrates progress towards sustainable profitability and balance sheet repair.

Disclaimer: This article is based solely on ESG’s published financial results for 1HFY2026. It does not constitute investment advice. Investors should conduct their own due diligence and consider their individual risk tolerance before making any investment decisions.

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