Chelsea Logistics [C 1.30, up 4.0%; 0% avgVol] [link] posted its FY23 Annual Report showing a P1.24 billion net loss. This was a 54% improvement over its FY22 net loss of P.53 billion. Chelsea achieved revenue growth (+10%) and improved its gross profit margin (12% vs 10% in FY22), but it still reported an operating loss of P43.8 million. Chelsea’s FY23 revenue performance was greater than its pre-pandemic 2017 record, driven by a 44% increase in passenger volume and a 14% increase in trips. Despite a focus on debt management, Chelsea still reports having over P3.85 billion in current loans (~P3.01 billion in bank loans) and over P13.18 billion in long-term loans, for a total of P17.04 billion in total borrowings.
MB bottom-line: The company has P10 billion in current assets matched up against P15 billion in current liabilities. It has just P0.4 billion in cash. While this is nothing new for Chelsea under Dennis Uy’s leadership, and its management team has “no material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern”, Chelsea’s auditor (P&A Grant Thornton) said that it’s “opinion is not modified” on Chelsea’s “increasing liquidity risk arising from the Group’s high debt-leveraged status”. I’d love to see what this company could have been under different leadership. We’re a nation of islands with cost-conscious consumers. The goods and people must flow. Chelsea continues to fumble its positioning which could have seen it take on an indispensable Spacing Guild role. Instead, it’s trying to shovel itself out of this debt hole of its own making. The airlines are constrained due to a lack of planes. There is no lack of boats. Perfect opportunity? Probably, yes, for a company with money. Of which Chelsea is not.
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