Nippecraft Limited: 1H2025 Financial Results Analysis

Nippecraft Limited, a Singapore-listed company specializing in stationery and trading of pulp and related products, has released its unaudited interim financial results for the six months ended 30 June 2025. Below, we examine the company’s key financial metrics, historical trends, segment performance, cash flows, and strategic outlook to help investors make informed decisions.

Key Financial Metrics: YoY and QoQ Comparison

*Note: Only half-yearly data available. ‘2H2024’ is inferred as the previous period for QoQ comparison.

Segment Performance and Historical Trends

• Stationery Business: Revenue rose 51% YoY to \$4.77m, mainly due to higher sales in Australia. However, gross margins decreased to 45.4%, attributed to sales mix and increased inventory write-downs.
• Trading Business: Revenue declined 11% YoY to \$38.05m, impacted by weaker demand in Singapore and Continental Europe due to strong market competition, partially offset by increased sales to Hong Kong. Gross margin held flat at a low 1.0%.
• Gross Profit: Despite lower overall revenue, gross profit increased 24% to \$2.54m, owing to improved contribution from the stationery segment.
• Net Loss: The group’s net loss narrowed from \$1.60m to \$1.15m, aided by higher gross profit and reduced foreign exchange losses.

Cash Flow and Balance Sheet Strength

• Operating Cash Flow: The group recorded a net operating cash outflow of \$0.78m, mainly due to increased inventory and reduced payables, partially offset by improved receivable collections.
• Cash and Equivalents: Ended the period at \$13.2m, down from \$15.6m a year ago, reflecting cautious capital management amid challenging conditions.
• Net Asset Value: NAV per share fell slightly to 9.01 US cents (Group) from 9.14 US cents at year-end.

Exceptional Items and Related-Party Transactions

• Other Income: Included higher rental income, government grants, and absence of termination benefits, helping offset operating expenses.
• Related-Party Transactions: Purchases from Gold East Trading (Hong Kong) Co. Ltd (an APP Group associate) totaled \$2.48m, conducted under shareholder mandate.
• No share buybacks, dilution, or fundraising were reported during the period.

Dividend Policy

• No dividend declared for 1H2025 (and 1H2024), as management aims to conserve resources amid ongoing challenges.

Macroeconomic and Industry Outlook

• The group faces persistent competitive pressures in both segments, with additional challenges from geopolitical tensions, uncertain demand, and rising costs (raw materials, shipping, labor).
• Management continues to focus on preserving cash, optimizing cash flows, and maintaining liquidity to navigate ongoing uncertainties.

Chairman’s Statement and Tone

“Amidst the heightened global geopolitical and economic uncertainties, the Group will continue to proceed with caution and prudence, while taking proactive steps to maintain strong capital management discipline. This includes preserving cash, optimising cashflows, and maintaining a solid liquidity position.”

The tone is prudent and cautious, emphasizing risk management and liquidity rather than growth or aggressive expansion.

Conclusion and Investor Recommendations

Overall Assessment: Nippecraft Limited’s financial performance for 1H2025 is neutral to weak. While net loss has narrowed and gross profit improved due to better stationery segment results, the group remains challenged by lower overall revenue, thin trading margins, and ongoing macroeconomic headwinds. No dividend has been declared, and management’s outlook is cautious.

Investor Recommendations

• If currently holding the stock: Maintain a cautious stance. Consider holding if you are risk-tolerant and believe in the group’s ability to manage liquidity and weather market challenges. However, lack of dividend and ongoing losses suggest monitoring closely for any signs of sustainable turnaround or further deterioration.
• If not currently holding the stock: Consider waiting. The business faces significant headwinds and uncertainty; entry may be premature until there is clearer evidence of margin improvement, revenue growth, or strategic catalysts.

Disclaimer: The above analysis is strictly based on Nippecraft Limited’s disclosed 1H2025 financial results and does not constitute investment advice. Investors should perform further due diligence and consult a financial advisor before making any investment decisions.

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