Investment Details
SDAX worked with one of Singapore’s leading manufacturers and wholesale trade of sugar products and food commodities to launch an investment opportunity on the platform. This exclusive preview is available to specific investors on the SDAX platform. This investment will be a participation in a receivables financing facility of up to SGD 1 million (“Receivables Financing Facility”) for the client (the ”Client”).
About the Issuer and Loan Purpose
The Client was incorporated in 2019 as an exempt private company limited by shares. The Client is the marketing arm of the Corporate Guarantor, which Corporate Guarantor has been in operation for more than 25 years and is one of Singapore’s leading manufacturers and wholesale traders of sugar products and food commodities (collectively, the “Group”). They also produce rock sugar, red sugar and black sugar. The Client primarily serves customers who are retailers, supermarkets, restaurants, food manufacturers, traders, brokers and industrial users. Key customers include NTUC Fairprice, Sheng Shiong, Kopitiam, Phoon Huat and Gold Roast Food Industry.
The funds raised will be used for working capital and general corporate purposes.
Investment Highlights
- Restructured for growth – Corporate Guarantor undertook a strategic review and spin-off their marketing function to form the Client in 2019. Post reorganisation, the Corporate Guarantor is the asset owner of the Group’s manufacturing plant while manufacturing, production, marketing and trading of sugar products sit with the Client.
- High growth – Revenue came in at SGD 37 million for 11 months ending Aug 2021 vs. SGD 8 million for FYE Sep 2020, an increase of 309%. The increase in revenue is against the back of the Corporate Guarantor’s reorganization as sales from the Corporate Guarantor are transferred to the Client. In addition, the Client has also started trading and supplying liquid sugar to their regional customers.
- Diversified base of customers – The Client’s customers are retailers, supermarkets, restaurants, food manufacturers, traders, brokers and industrial users.
- Positive cashflow and EBITDA – Successfully registered positive cashflow and EBITDA of SGD 0.6 million (FYE Sep 2020) and SGD 3.9 million (11 months ending Aug 2021) respectively despite the COVID-19 pandemic challenges to businesses.
Product Suitability
What would you gain or lose in different scenarios?
- Best Case Scenario
- Investor getting the investment amount of 5.5% p.a. to 6.5% p.a. payout (adjusted by day count)
- Worst Case Scenario
- Borrower defaults, Personal Guarantor defaults, and we get into recovery of the value of the loan via sale of the property. Recovery value would then be the net value of the sales proceeds against the loan amount outstanding.
Investor Profile for this issuance should be MODERATE.
The nature of the investment is MODERATE.
Risk & Reward involved with the investment is MODERATE.