Asia BioFuel Corporation "ABC"
Raising
USD$ 20 Million
20 million ABC shares to be placed out at US$1 per share, minimum lot of US$2,500 each.
WIIFI - What's In It For Investors?
About ABC
Asia Biofuel Corporation “ABC” was incorporated in Wyoming, United States, on March 5th, 2024, with 30% ownership held by ApexCapital.Asia Ltd and 70% by Mr. Tran Hoai Duong & Partners. Mr. Tran and his partners bring with them over 10 years of hands-on experience in managing and producing biofuels in Asia, particularly in Vietnam. They have overseen production and sales valued at US $93 million, yielding $3 million in profits despite working with limited and traditional facilities.
ApexCapital.Asia LTD is a subsidiary of Raffles Financial Group Ltd, offering a diverse range of financial services including corporate and trade financing, public listing and fundraising, online e-funding, structured 10-year loans, and M+A funding and advisory services.
Apex Biofuel Pte Ltd “SA” is incorporated in Singapore as an Asia-based entity for central procurement, sales, banking, and investor relations. SA’s responsibilities include
- Appointing outsourced production contractors “OPC” in Vietnam, Indonesia, and the Philippines.
- Procures all feedstocks from the US, Brazil, India, Pakistan, and Eastern Europe, and consigns them to the OPC for production.
- Sells all production outputs to long-term clients in ASEAN.
- Handles all cash inflows, outflows, and submits all financial reports to ABC.
Strategy
ABC is adopting an asset-light corporate strategy, wherein feedstock and raw materials are procured and consigned to the outsourced processing plant contractor, “OPC,” to produce end products for sale to ABC clients. The estimated working capital for procurement is $20 million.
ABC will specify and acquire up-to-date equipment for the OPC and assist in securing funding and bank loans for the purchase of property, plant, and equipment, “PPE,” by the OPC. The shortlisted OPC estimates the need for $40 million to upgrade and supplement new equipment into their current $40 million PPE.
ABC commits to a 10+10-year outsourced contract with the OPC to lease the plant and production services at 10% of the total PPE costs as a yearly fee payable quarterly in advance, at a rate of 2.5%.
Market Size: Global & ASEAN
The biofuel market in the ASEAN region is a significant and growing sector, driven by a mix of abundant agricultural resources, government mandates, and a collective effort to promote sustainable energy sources. Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are key players, each with varying degrees of biofuel production and blending mandates aimed at increasing the use of biofuels in their energy mix. For instance, Indonesia aims for B40 (40% palm-based biodiesel) by 2030 and E50 (50% ethanol) by 2050, while Malaysia has implemented B20 and E10 mandates.
ASEAN countries are among the top producers of agricultural products like palm oil and sugar cane, which are crucial feedstocks for biodiesel and ethanol production, respectively. The biofuel industry not only supports domestic energy demand but also represents a vital export commodity. Moreover, biofuel consumption in ASEAN is projected to grow at 4.7% per year until 2050, highlighting its increasing role in the regional energy landscape.
The existing challenges such as feedstock availability, the competition between food and fuel, and the high costs of production compared to conventional fuels are notable. However, the potential for advanced biofuels, derived from non-food-based feedstocks, offers a path toward sustainable production with lower greenhouse gas emissions. Indonesia, Malaysia, the Philippines, and Thailand have begun research and development in advanced biofuels, signalling a shift towards more sustainable biofuel production methods.
The ASEAN biofuel market is not only a significant energy source but also a driver of economic development. By stimulating agricultural development and creating jobs across the biofuel value chain, the industry contributes to rural prosperity and economic growth. Moreover, ASEAN’s focus on biofuels enhances regional cooperation in renewable energy development, underscoring the collective effort towards achieving sustainability goals.
The ASEAN biofuel market’s growth is underpinned by supportive policies, the rising demand for sustainable energy, and the region’s vast agricultural resources. These factors, combined with strategic initiatives like the ASEAN Plan of Action for Energy Cooperation, position the biofuel sector as a key component of the region’s energy and economic future.
Challenges Faced by BioFuel Buyers
Buyers of biofuel face several pain points that can influence their decision-making process and overall satisfaction with biofuel products. These challenges include:
Target Segment
Under the ESG scheme, ABC is concentrating on the fuel blending market together with its long-term vision for SAF with ETJ technology which from 2030 will be in serious shortage because all airlines will have to adopt a more friendly petrol to reduce carbon footprint.
With OPC contracts with the largest factories in ASEAN about ethanol and biofuel, ABC will become the leading biofuels supplier in the region
Business Model
a. Cash Flow positive business model
ABC secures letters of credit (LC) from buyers for their one-year purchases. In turn, ABC issues corresponding LCs to suppliers of feedstock, namely corn. ABC ensures zero exposure and operates on back-to-back sales orders from customers and LCs to suppliers. Additionally, ABC can forfeit or factor the LCs for positive cash flow while offering customers credit terms without the risk of non-collection of debts.
b. Concept to Cash Cycle
For Materials Procurement, it takes up to 3 weeks for goods to arrive at ABC’s appointed factory. The production process takes 1 week. For (FOB) customers, the payment will be received by the company within 15 to 30 days from delivery of the customer’s order.
If Ex Works is used, the seller (ABC) is not obligated to load the goods on the buyer’s designated method of transport. Instead, the seller must make the product available at a selected location, and the buyer must incur transportation costs. Therefore, transportation costs and associated risks are no longer a burden for the company. For Ex Works customers, the payment will be paid on-site upon collection of goods.
Before procurement of raw materials, the company will pre-sell its by-products & bio fuels. The procurement is based on the client’s order. If no order is confirmed, no procurement will be made, therefore, minimal risk to the company.
Therefore, the total time taken for ABC to complete a cash conversion cycle will be within 60 days.
- Production Process
c. Compliance with Sustainable Development Goals (SDGs)
- SDG 7: Affordable and Clean Energy
Biofuels represent a renewable and sustainable alternative to conventional fossil fuels. By utilizing organic materials such as plants and agricultural waste, biofuels offer a cleaner energy source that helps reduce greenhouse gas emissions. By promoting the adoption of biofuels, communities can reduce their reliance on finite fossil fuels and move towards a more sustainable energy future.
- SDG 9: Industry, Innovation, and Infrastructure
The development and utilization of biofuels foster innovation in both technology and infrastructure. Innovations in biofuel production processes, such as advancements in feedstock cultivation, conversion technologies, and distribution networks, contribute to the goal of building resilient infrastructure. Furthermore, the biofuel industry stimulates economic growth and job creation, aligning with the objective of promoting inclusive and sustainable industrialization. By investing in biofuel research and development, nations can enhance their technological capabilities and drive forward the transition towards cleaner energy sources.
- SDG 12: Responsible Consumption and Production
Biofuels support sustainable consumption and production patterns by utilizing organic materials that can be replenished over time. Unlike fossil fuels, which are finite resources, biofuels rely on renewable feedstocks such as crops, algae, and waste biomass. By minimizing reliance on non-renewable resources and reducing the environmental impact associated with traditional fuel production, biofuels promote responsible consumption and production practices.
- SDG 13: Climate Action
One of the most significant contributions of biofuels is their role in reducing greenhouse gas emissions and mitigating climate change. By displacing fossil fuels, which release carbon dioxide and other pollutants when burned, biofuels help reduce the overall carbon footprint of transportation and other sectors. Additionally, biofuels offer the potential for carbon neutrality when produced from sustainable feedstocks and coupled with efficient production processes.
- SDG 15: Life on Land
Sustainable biofuel production practices can contribute to the conservation and sustainable management of terrestrial ecosystems. By utilizing non-food crops, agricultural residues, and marginal lands for feedstock cultivation, biofuel production can help reduce pressure on valuable agricultural land and natural habitats. Furthermore, biofuel production processes can be designed to minimize soil erosion, water pollution, and habitat destruction, thereby promoting land restoration efforts and preserving biodiversity.
Cutting Edge
With ABC’s strategy and business model, ABC can accept more orders without the usual huge capital expenditure to build a $100 million plant to fulfill additional sales orders. ABC can utilize its proprietary intellectual property ‘know-how’ on plant and equipment specification and design to assist owners of PPE in jumpstarting their biofuel production business.
OPCs are outsourced parties that receive assistance from ABC on how to secure funding for their PPE, enabling them to fulfill and deliver production services required by ABC. With ABC’s long-term lease contracts, funders are assured of loan repayments and servicing of interest. ABC procures feedstock and consigns them to the OPCs, thus relieving them of the working capital needed to pay in advance for supplies. As soon as the end product is produced and shipped out, ABC gets paid, as does the OPC.
ABC focuses on procurement, sales, and money management, while the OPC takes care of production and shipment. Each party maximizes its comparative advantages, using less capital for greater profits.
Frequently Ask Questions
The current share price for a subscription is $1.
Shareholders can expect 80% of profits in dividends, estimated to be around 25 cents per share.
The team possesses over 20 years of experience and expertise in the field of biofuel.
ABC adopts an asset-light corporate strategy, where it procures feedstock and raw materials and consigns them to an outsourced processing plant contractor (OPC) for production. The end products are then sold to ABC’s clients.
The estimated working capital required for procurement is $20 million.
Key players in the ASEAN biofuel market include Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. Each country has varying biofuel production and blending mandates, such as Indonesia’s aim for B40 (40% palm-based biodiesel) by 2030 and E50 (50% ethanol) by 2050, and Malaysia’s implementation of B20 and E10 mandates.
ASEAN countries are investing in research and development of advanced biofuels derived from non-food-based feedstocks, aiming for sustainable production with lower greenhouse gas emissions.
ABC secures letters of credit (LC) from buyers for one-year purchases and issues corresponding LCs to feedstock suppliers. It operates on back-to-back sales orders and can forfeit or factor LCs for positive cash flow. Additionally, ABC offers credit terms to customers without the risk of non-collection of debts.
ABC’s Concept to Cash Cycle involves procuring materials, production, and selling products. The total time taken for ABC to complete a cash conversion cycle is within 60 days.
Before procuring raw materials, ABC pre-sells its by-products and biofuels based on client orders. If no order is confirmed, no procurement will be made, minimizing risk to the company.
The “McDonaldization” of ABC’s biofuel business refers to its streamlined and efficient approach, enabling the acceptance of more orders without significant capital expenditure on building large production plants. ABC utilizes its proprietary intellectual property to assist owners of production equipment in starting their biofuel production businesses.
ABC’s business model ensures a smooth flow of funds by focusing on back-to-back sales orders, minimizing upfront capital expenditure, and maximizing profits through efficient utilization of resources.
USD $ 500 for 500 shares is the minimum subscription amount in this raise.
Investors could potentially gain 304%, 564%, and 825% for the FY 1, 2, and 3 respectively, based on forecasted profit after tax and a price-earning multiple of 15 times.
No, the illustration provided serves as a forecast of potential gains and does not guarantee performance. Like any other investment, there are risks that the forecasted gains may not be realized due to various factors such as inaccuracies, wrong assumptions, ineffective execution, and other reasons.
Investors should study all forecasts carefully, considering factors such as assumptions, risks, and potential variations, before making investment decisions. Making informed decisions involves understanding the uncertainties and risks associated with investment forecasts.
ABC plans to place out 20 million shares at a price of US$1 each, with a minimum lot size of US$500.
The funds raised through the capital raise will be allocated as follows:
- Procurement of 3-month feedstock: US$15 million
- Operating expenses: US$2.5 million
- OPC leasing costs: US$2.5 million
For any inquiries or assistance regarding the capital raise or use of funds, please contact our investor relations department at tiffany@apexcapital.asia. Our team will be happy to address any questions or concerns you may have.
