Jawala Inc: Financial Analysis Report 2024 – Net Loss Increased to RM2.7 Million

Business Description

Jawala Inc. operates as a forest resource company focusing on industrial tree plantations in Sabah, Malaysia. The company specializes in the sustainable management of forestry resources, including the planting and extraction of timber. Its core business segments include the sale of logs and industrial tree plantations. Jawala’s primary geographic footprint is in Malaysia.

Industry Position

Jawala Inc. manages a Licensed Area comprising a Commercial Forest Reserve of approximately 11,043 hectares in the Sapulut Forest Reserve in Sabah, Malaysia. The company faces competition from other forest resource companies in Malaysia and the broader Southeast Asian region. Although specific market share data is not provided, the company’s commitment to sustainable plantation development positions it favorably in the industry.

Revenue Streams and Customer Base

Jawala’s revenue is primarily derived from the sales of logs in Malaysia. The company’s products include various types of logs, such as Seraya, Kapur, Keruing, Selangan Batu, Majau, Sedaman, and logs of hard and soft densities. The customer base includes local and international buyers in the timber market.

Supply Chain and Competitive Advantage

Jawala’s supply chain includes the sustainable management of forest resources, replanting activities, and timber extraction. The company’s competitive advantage lies in its commitment to sustainable forest management and its long-term license to manage a significant forest reserve until 2115.

Financial Statement Analysis

Income Statement

For the financial year ended 31 July 2024, Jawala Inc. reported a total revenue of RM8.2 million, a decrease of 27% compared to RM11.2 million in FY2023. The company incurred a net loss after tax of RM2.7 million, compared to a net loss of RM0.9 million in FY2023. The decline in revenue was attributed to the decision to delay logging and production operations due to weak prices and demand in the timber market.

Balance Sheet

As of 31 July 2024, Jawala’s total assets stood at RM68.7 million, compared to RM61.2 million in the previous year. This includes significant biological assets valued at RM42.2 million. The company’s current liabilities amounted to RM4.4 million, while non-current liabilities were RM19.9 million. The total equity decreased to RM44.4 million from RM47.1 million in FY2023.

Cash Flow Statement

Net cash used in operating activities was RM6.9 million, an increase from RM5.6 million in the previous year. The company’s cash and bank balances decreased significantly to RM8.9 million as of 31 July 2024, from RM19.5 million in FY2023.

Dividend Information

No dividend has been declared or recommended for FY2024 due to the recorded loss and strategic reserves requirement.

Key Findings

Strengths

• Commitment to sustainable forest management.
• Significant long-term license for forest reserve management.

Risks

• Significant net loss and reduced revenue.
• Decreased cash and bank balances.
• Exposure to market price fluctuations and demand in the timber industry.

Report Date and Financial Year

This report is dated 25 October 2024 and covers the financial year ending 31 July 2024.

Special Activities

Jawala has undertaken a comprehensive climate risk assessment and aligned its climate risk register with its Enterprise Risk Process (ERP) to improve its sustainability performance.

Investment Recommendations

If Currently Holding the Stock:

Investors holding Jawala Inc. stock should consider the company’s current financial challenges, including increased net losses and reduced cash reserves. It may be prudent to hold their positions and monitor upcoming financial performance and market conditions closely.

If Not Currently Holding the Stock:

Potential investors should approach with caution given the current financial instability and market risks. However, the company’s strong commitment to sustainable practices and long-term forest reserve management could be seen as a positive long-term investment if financial performance stabilizes.

Disclaimer: This analysis is based on the financial statements and information provided in the report and does not constitute financial advice. Investors should conduct their own due diligence before making investment decisions.