OTS Holdings Limited: 1H2026 Financial Results Analysis

OTS Holdings Limited, a Singapore-based manufacturer and trader of halal and non-halal meat products, released its condensed interim financial statements for the six-month period ended 31 December 2025 (“1H2026”). The report provides valuable insight into the company’s operational challenges, financial performance, and strategic direction amid a turbulent market environment.

Key Financial Metrics and Performance Comparison

Historical Performance Trends

• Revenue has declined for two consecutive reporting periods, falling 15.4% YoY largely due to lower sales across most segments, especially exports.
• Gross profit margin contracted from 28.3% to 24.8%, reflecting weaker sales and production volume.
• The company swung from a net profit of \$703k in 1H2025 to a net loss of \$282k in 1H2026.
• No dividend was declared for 1H2026, as management chose to conserve cash for working capital and future growth.

Segment and Geographic Highlights

• Modern Trade: Revenue down 5.3% YoY to \$3.6m due to subdued consumer sentiment and intensified competition from house brands.
• General Trade: Revenue down 5.1% YoY to \$4.8m, mainly from lower demand in Singapore.
• Food Services: Revenue stable at \$3.9m.
• Others (Exports/E-commerce): Revenue down 54% YoY to \$1.9m, mostly due to a decline in export sales.
• Singapore: Revenue decreased 4.8% YoY to \$10.4m.
• Malaysia: Revenue increased 13.5% YoY to \$2.5m, driven by higher demand in key segments.
• Other Markets (Exports): Revenue plunged 64.3% YoY to \$1.3m, reflecting evolving overseas market dynamics.

Exceptional Items and Related Party Transactions

• Other income and gains fell 48.3%, primarily due to lower foreign exchange translation gains and a reduction in SGD loan balances converted to equity in a subsidiary.
• New bank borrowings and a \$2.0m director loan increased financial costs by 28.6% YoY.
• Related-party transaction: \$1.0m worth of sales to Swee Heng Bakery Pte Ltd under a shareholder mandate.
• No asset revaluation issues or major errors/inconsistencies reported.

Cash Flow and Balance Sheet Overview

• Operating cash outflows of \$1.2m, mainly due to working capital increases and lower trade payables.
• Investing cash outflows of \$0.9m for property, plant, and equipment, especially for the new facility in Malaysia.
• Financing inflows of \$1.7m, mainly from new director loan and bank borrowings.
• Cash and cash equivalents decreased by \$0.4m to \$2.4m at 31 December 2025.
• Net asset value per share: 12.33 cents (Group); 9.62 cents (Company).

Chairman’s Statement

“Operating conditions remain challenging, with the Group continuing to contend with elevated cost levels and a highly competitive retail landscape. Inflationary pressures have driven up raw material, labour and operating expenses, while intensified competition — particularly from supermarkets’ own private-label offerings — has further constrained pricing flexibility. Beyond the immediate operating environment, broader global uncertainties continue to cloud the outlook. Geopolitical developments in the Middle East and Ukraine, ongoing US tariff policies, sustained high global meat prices and increased freight costs have collectively impacted supply chains and market sentiment.

In navigating these headwinds, the Group has prioritised disciplined execution across its core business functions. Cost controls have been tightened across operations, alongside efforts to improve production efficiency and optimise distribution processes. At the same time, the Group maintained core marketing and sales initiatives to support brand visibility and outreach, while exercising tighter control over marketing cost, which were lower than the prior financial year.

Looking ahead, the Group is also progressing with its longer-term capacity strategy, including preparations for the full operational commencement of its new manufacturing facility in Malaysia. Taken together, these initiatives are intended to reinforce operational resilience and lay the groundwork for sustainable growth, with benefits expected to accrue progressively over time.”

Tone: Cautiously optimistic, but acknowledges significant near-term headwinds and challenges.

Events and Corporate Actions

• No dividend declared for 1H2026 as cash is being conserved for working capital and growth.
• Full utilisation of IPO proceeds as of this reporting period.
• No share buybacks, placements, or dilution reported.
• No major asset sales, divestments, or fundraising actions in the current period.
• No known subsequent events requiring adjustment to the financials.
• Significant director loan (\$2.0m) to strengthen liquidity.
• Progress on new Malaysian manufacturing facility, with certifications pending but expected to be completed soon.

Forecasted and Expected Events

• Company expects benefits from new manufacturing capacity in Malaysia to accrue gradually as operations ramp up.
• Continued focus on cost controls and operational efficiency amid persistent inflationary and competitive pressures.
• No explicit profit guidance for the next period, but management signals a cautious outlook.

Conclusion and Recommendations

OTS Holdings Limited’s 1H2026 results reflect a weak financial performance, with revenue and profit both declining sharply amidst challenging market conditions, rising costs, and intense competition. The company is taking steps to reinforce operational resilience, but near-term prospects remain subdued as it navigates multiple headwinds. The absence of a dividend signals a defensive posture as management prioritises liquidity and working capital.

• If you are currently holding OTS Holdings stock: Consider maintaining your position if you have a high-risk tolerance and a long-term horizon, as the company is investing in new capacity and strengthening its balance sheet. However, be mindful of continued operational challenges and monitor progress on the Malaysia facility ramp-up. If you are risk-averse or require income, you may wish to reassess your holding given the lack of dividends and recent losses.
• If you are not currently holding OTS Holdings stock: Exercise caution before initiating a position. The stock may present value if the company successfully executes its turnaround and the new facility delivers incremental growth, but current fundamentals are weak and visibility is limited. Wait for evidence of sustained recovery and margin improvement before considering an entry.

Disclaimer: This analysis is based strictly on information disclosed in OTS Holdings Limited’s official financial report and does not take into account any external factors or market developments. It does not constitute financial advice. Investors should conduct their own due diligence or consult a qualified advisor before making investment decisions.

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