NEWLY listed Shanaya said on Thursday it expects to be able to handle an additional 220 tonnes of daily waste with its new Tuas waste management facility, and is hopeful of processing more waste as shipping traffic through Singapore rises.

 

The company, which debuted on the Catalist board on Thursday following a reverse takeover (RTO) of former printed circuit board company CPH, said that the facility will also benefit from being near Tuas Mega Port, which will begin opening progressively this year.

 

Shanaya is well-positioned to take advantage of increased shipping and cruise traffic in the coming years as the company' s waste-management plants can process a wide variety of waste, said chief executive Mohamed Gani Mohamed Ansari.

 

Without Shanaya' s services, ships and cruises would have to use the little time that they have on the shore to engage with different contractors for different types of waste.

 

Shanaya' s new Tuas facility began operations in May. In the circular provided to CPH shareholders on June 29, Shanaya said the facility, which spans 8,829 square metres, is expected to operate at 25 per cent capacity in FY2021, 65 per cent capacity in FY2022 and 80 per cent capacity in FY2023.

 

The Tuas facility is now able to recycle between 5 and 15 per cent of waste collected, including paper, plastics, metals, electronic waste and wood, up from 2 to 3 per cent before.

 

The facility also expands the company' s waste-management scope by providing an integrated platform for the management and recycling of general waste, selected toxic industrial waste and pyrotechnics management services.

 

Previously, Shanaya was able to handle 50 tonnes of waste daily at its facility in Kian Teck Drive in Jurong.

 

Mr Ansari and his wife Shitthi Nabesathul Bathuria have worked in the recycling industry since 2002.

 

They began branching out into cruise waste management in 2013, on the back of the growth of the fly-cruise tourism market.

 

Aside from increased capacity, the company is also exploring the possibility of venturing downstream for the recycling of glass and plastic waste in an effort to raise the percentage of recycled waste. In particular, the company aims to be one of the first companies in Singapore to recycle glass.

 

" We are very excited about our recycling expansion plans," Mr Ansari said, adding that the company' s goals are in line with the Singapore Green Plan 2030, as the nation looks to improve resource recovery and increase its recycling rate.

 

Shanaya reported a profit of S$773,692 for the financial year ended Dec 31, 2020, down 32.2 per cent from S$1.1 million in the year-before period. Revenue fell by 1 per cent to S$5.8 million. The company also generated positive operating cash flow of S$2.2 million for the same period.

 

But it has a high gearing ratio. For the financial year ended Dec 31, 2020, it had net debt of S$15.1 million versus shareholder equity of S$3.9 million.

 

According to the circular, the listed entity' s net gearing ratio following the RTO would increase, on a pro forma basis, to 86.6 per cent as at March 31, from 46.6 per cent previously.

 

Mr Ansari attributed the high leverage to the company' s need for more resources to grow in the beginning, but said the ratio would come down as the company grows.

 

For instance, the company had invested S$9.5 million to build and equip its Tuas facility.

 

As for the decision to list Shanaya via an RTO, Mr Ansari said that it had begun looking for access to capital markets in 2018 and he found that CPH was a " good match" for the company. He also felt that an initial public offering could have taken a longer time to be approved, especially during the pandemic.

 

Following the RTO, Ms Shitthi will own 49.1 per cent of the shares in Shanaya.

 

Sivakumar Martin Sivanesan and Perumal Gopa will hold 14 per cent and 7 per cent of the company' s shares respectively. The two, who joined the company in 2013 and 2014 respectively, are long-term business partners of Mr Ansari and Ms Shitthi.

 

CPH' s former managing director Choo Tung Kheng will hold 5.5 per cent of the company' s shares.

 

CPH had acquired Shanaya for S$22 million, comprising S$3 million in cash and 3.17 billion new ordinary shares at an issue price of 0.6 Singapore cent per share.

 

The S$3 million in cash will be funded by proceeds from CPH' s disposal of its Lok Yang property. Another S$414,287 of the net proceeds from the disposal will be earmarked to secure the full lease term of a land parcel where the Tuas facility sits.

 

The issue price of 0.6 cent per share was a premium of 33.3 per cent to the volume-weighted average price of 0.45 cent per share based on trades done on the shares on Sept 28, 2020, before the deal was announced.

 

Shares were also issued to PrimePartners Corporate Finance (PPCF), the financial adviser and sponsor to the company, and to Oakwood & Drehem in lieu of an introducer fee. The two parties will hold 1.5 per cent and 1.1 per cent, respectively. PPCF has said it intends to sell its shares after the moratorium period.

 

Following the issue of new shares, the company also conducted a 40-to-1 consolidation of its shares.

 

Shanaya shares opened at 22 Singapore cents, down 4.5 cents or 17 per cent from its adjusted closing price of 26.5 cents on Wednesday.

 

The company' s shares closed at 22.5 cents, down 15.1 per cent or four cents on Thursday.

 

That gives it a market capitalisation of S$25.4 million and an implied price-to-earnings ratio of 32.8 times for FY2020.