Keyboard and Mouse

Procurri

sales.png
geog.png
margin.png

Leading the Pack

ASVIDA Asia was established in 2009. In 2013, the firm acquired Procurri LLC in U.S. and renamed as Procurri Corporation. Listed in SGX in July 2016, Procurri is a provider of IT Lifecycle services and Distribution of pre-owned or refurbished equipments. 

Headquartered in Singapore, the company provide services in more than a hundred countries in a fragmented market.

Acquisitions includes:

2014 - Tinglobal Holdings and subsidiary Tindirect, U.K.

2014 - Verity Solutions, Malaysia

2015 - Procurri Asia Pacific, Singapore

2016 - EAF Supply Chain Holdings, U.K.

2017 - JV with Congruity LLC to form Rockland Congruity LLC, U.S.

2019 - Acquired remaining 49% Rockland Congruity LLC, U.S.

Financial

Revenue has been growing steadily through acquisition and expansion in Americas and EMEA. 

Lifecycle Services historically command a higher gross margin of 45% - 60% while Distribution average 27%. Softer margin for both businesses were due to COVID-19 impact.

Net margin from 2013-2016 was between 4% - 7%.

Post acquisition of Rockland Congruity pushed expenses from 27% average to 35% in 2017 resulting in losses. 

Expense in 2020 improved to 28.2%. However is was accompanied by weak gross margin of 27.7% due to low-margin sales in Distribution to clear aged inventories and weaker Lifecycle margin.

 

Absent $5.4M government grants in 2020, Procurri would have registered net loss for the year. 

 

Risk

Majority of the company assets are in inventories, receivables and cash & equivalents. Balance sheet health is moderate with current ratio of 1.6 and Z-Score of 3.2

Shareholders

In Mar-2019, Novo Tellus  became the company largest shareholder at 19.51% as of FY2020.

In Mar-2021, Novo Tellus offered to acquire 27.91% at $0.365 of Procurri, increasing stake to 51%.

DeClout, ICH Gemini and Koh Swee Yong were against the offer.

Opinion

Semiconductor shortage and IT equipments demand is likely to support Lifecycle Services in the near term. 

Clearance of aged inventories could also help improve Distribution margin. 

Assuming continued growth in revenue and with expenses kept at around 28%; improving gross margin is crucial in returning the business to profitability.

Subsequently, revenue growth will be the catalyst for earning.