FMFC

Business Context and Reporting Period

Company: Kandal M Venture Limited (KMV), a Cayman Islands exempted company and holding company.

Operations: KMV conducts its core business through its operating subsidiary, FMF Manufacturing Co., Ltd. (FMF), located in Kandal Province, Cambodia. The company is a contract manufacturer of affordable luxury leather goods, primarily handbags and wallets, for well-known global fashion brands headquartered in the United States.

Reporting Period: Fiscal year ended March 31, 2025 (FY2025).

Listing Status: Completed Initial Public Offering (IPO) on June 26, 2025, listing Class A Ordinary Shares on the Nasdaq Capital Market under the symbol "FMFC".

Key Financial Metrics

Note: Borrowings were fully repaid and discharged as of July 2025 following the IPO.

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased by 23.0% (US$3.2 million) driven by stable business growth and recovery in the global handbag market.
• Margin Compression: Gross profit margin declined by 4.6 percentage points to 19.5%. This was attributed to a shift in product mix, lower efficiency from new designs, increased indirect material costs, and additional production supervisors.
• Profitability Decline: Net income decreased by 81.3% to US$209,673. The decline was primarily due to increased cost of sales and significant one-off IPO-related expenses (professional fees increased by over 1,000% to US$897,608).
• Liquidity Position: The company moved from a net current asset position in FY2024 to a net current liability position of US$215,135 in FY2025, largely due to increased trade payables and accrued expenses related to IPO preparations. However, cash flow from operations remained positive.

Guidance, Outlook, and Risks

Use of Proceeds: Net proceeds from the IPO (approx. US$9.2 million gross) are planned for: 50% enhancing production capacity, 30% working capital, 10% broadening customer base (including European markets), and 10% establishing a new design center.

Management Commentary: Management believes working capital will be sufficient for the next 12 months, supported by IPO proceeds and positive operating cash flow. The company intends to retain earnings for expansion and does not anticipate paying dividends in the foreseeable future.

Key Risks and Contingencies:

• Customer Concentration: Extreme reliance on a single customer, who accounted for 79.8% of FY2025 revenue. The company has no long-term agreements with customers.
• Supply Chain & Raw Materials: Exposure to price fluctuations in leather, fabric, and hardware. No long-term contracts with suppliers.
• Geopolitical & Regulatory: Operations are subject to Cambodian laws, which are in a developmental stage. Risks include labor unrest, wage increases, and potential foreign exchange controls.
• Related Party Transactions: Significant balances and loans existed with related parties (e.g., Fashion Focus Manufacturing Ltd, Merit Focus Ltd), though these were largely repaid or discharged post-IPO.

Investor Verification Checklist

• Customer Dependency: Verify the stability of the relationship with the single customer representing ~80% of revenue and the risk of order cancellations.
• Margin Sustainability: Assess whether the 19.5% gross margin is sustainable given rising labor costs in Cambodia and raw material volatility.
• Related Party Exposure: Confirm the full discharge of related party loans and guarantees (noted as discharged as of the report date) and ensure no hidden contingent liabilities remain.
• Working Capital: Monitor the company's ability to manage the net current liability position without the immediate influx of IPO cash, should operational delays occur.
• Regulatory Compliance: Review compliance with Cambodian labor laws and tax regulations, specifically regarding the 14% withholding tax on dividends and potential changes in investment incentives.