Background
Samurai 2K is a leading aerosol coating specialist with a regional office in Singapore.
The group focuses on high performance coating solutions for the automotive refinishing and refurbishing industry. They have cutting-edge technology and unique techniques to provide quality aerosol goods to customers all over the world.
The group’s products are manufactured in their production facility located in Johor, Malaysia, and are distributed in countries including Malaysia, Indonesia, Thailand, Philippines, Vietnam, Cambodia, India, United Kingdom, United States of America, and Singapore.
Business Model
Samurai 2K is principally engaged in the manufacturing, distribution and marketing of a wide range of products under their own proprietary brands, which includes SAMURAI, KUROBUSHI, CANBRUSH, Bushido, Khameleon, Ninjufsu, Geigi, etc.
The 2K 2-COMPONENT SAMURAI® aerosol spray paint system is a unique, easy-to-use product that allows resin and hardener to be mixed in a single aerosol can. Developed after at least 5 years of research and development, the group has successfully obtained patents for this product in several countries, including United States of America, the European Union, Russia, South Korea, New Zealand, Japan, and China.
In FY2022, they sold over 16 million cans of aerosol spray paint. They are aiming to launch a new product, the “Tintatek” technology, next year. This will be the first-ever colour mix & match system for aerosol spray paint, allowing users to generate millions of colours from only 26 basic primary colours.
Users will be able to custom fill their desired colours into the aerosol can and spray it on appropriate surfaces thereafter, without any need for complicated tools or equipment. They are also developing a spray paint service matching platform to help link up customers who require spray painting services with those who can render said services at their doorsteps. They envision this to be an incredibly economical and convenient solution to resolve our customers’ pain points.
Full Yearly Results for period ending 2022-03-31
Revenue
Revenue slightly increased by approximately RM2.41 million or 2.18% from RM110.63 million in FY2021 to RM113.04 million in FY2022. The increase in revenue was mainly due to increased demand from Malaysia and other country market offset with decrease in demand in Indonesia market.
Cost of Sales and Gross Profit
Cost of sales increased by RM8.05 million or 14.19% from RM56.75 million in FY2021 to RM64.80 million in FY2022 was due to the increase in raw material and packaging material cost. Gross profit decreased by RM5.64 million or 10.48% was in line with the increase of cost of sales.
Other Income
Other income comprised mainly of interest income, net gain on foreign exchange and rental income. The decreased in other income by RM0.90 million or 43.42% in FY2022 compared to FY2021 was mainly due to a decrease in net of foreign exchange gain by RM1.25 million offset with increase in interest income by RM0.46 million.
Trade and other receivables
As at 31 March 2022, trade and other receivables consisted of approximately RM18.45 million of trade receivables (31 March 2021: RM14.36 million) and approximately RM8.14 million of other receivables (31 March 2021: RM2.84 million). Trade receivables increased by RM4.09 million from RM14.36 million in FY2021 to RM18.45 million in FY2022, in line with increased in export sales to other country and other receivables increased by RM5.30 million mainly due to increase of prepayment to suppliers. As at the date of this announcement, the Group has collected approximately RM3.17 million or 17.18% of the trade receivables as at 31 March 2022.
Current borrowings
Short term borrowings increased by RM1.72 million, or 10.70% mainly due to utilisation of banker’s acceptance amounting to RM1.61 million.
Dividend
The Group intends to declare dividends consistently, on the Group’s profits generated during each financial period/year, by taking into consideration the expansion plan and future investments on capital expenditure.
For FY2022, the Board of Directors has paid an interim dividend (one-tier tax exempt) of SGD0.002 per ordinary share and special dividend of SGD0.004 per ordinary share on 7 December 2021 and further recommended a final dividend (one-tier tax exempt) of SGD0.002 per ordinary share and special dividend of SGD0.004 per ordinary share, subject to shareholders’ approval at the annual general meeting to be held on 27 July 2022.
Cash Flow Statement
Net cash from operating activities
In FY2022, net cash generated from operating activities amounting to RM13.59 million, arising from operating cash flow before changes in working capital of RM27.56 million, changes in net working capital outflow of RM8.51 million, income tax payment of RM6.13 million, net interest paid amounting to RM0.68 million.
The net working capital outflow of RM8.51 million comprised of higher trade and other receivable of RM9.12 million, inventories of RM3.73 million and Trade and other payable has increased year-on- year by RM4.41 million.
Net cash used in investing activities
In FY2022, we recorded a net cash outflow from investing activities of approximately RM4.15 million mainly due to additional cost of upgrading and renovation of factory and purchase of plant and machinery.
Net cash from financing activities
In FY2022, they recorded a net cash outflow from financing activities of approximately RM13.09 million due to dividend paid amounted to RM 13.18 million, interest receive from fixed deposit pledge of RM0.31 million, repayment of lease liabilities of RM0.49 million, interest paid of RM0.86, treasury share expenses of RM0.06 and offset with drawdown of bank borrowing of RM 1.81 million.
As at 31 March 2022, the Group maintained a cash and cash equivalents balance of RM71.68 million.
Future Prospects
Although economies have opened up and moving into endemic COVID–19, management expects that there will be continued uncertainty and challenges when worldwide inflationary pressure is intensifying, supply chains are tightening and global demand is weakening, amid countries’ efforts to recover economically from a COVID–19 pandemic that has not seen its end. The Group will continue to enhance digital transformation and O2O (online to offline) by integrating it digital marketing teams as well as to develop and launch new innovative products to maintain market competitiveness. Currently, the Group is in the stage of building its teams in the USA and India markets which the progress is in line with our current marketing plan.
Technical Analysis
Resistance Level: SGD0.380
Support Level: SGD0.240, SGD0.135
Based on the stock weekly chart of SCamurai 2k Aerosol (Y8E), Y8E is currently sitting at a support price level of SGD0.240. A bullish view is established when the price of SAMUR manages to break above the SGD0.380 price level. In contrast, if SAMUR fails to stay above the SGD0.240 support level, it may fall and seek support at SGD0.135.
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