Nature’s Farm is a brand selling health supplements and other related products. However, Camsing Healthcare, the SGX-listed company that owns this franchise, is anything but healthy.
Already barely profitable for its FY2017 and FY2018 ended Jan 31, 2019, the company sank into a loss of $6.57 million for FY2019. Amid a whole litany of woes and changes at its board, the company only managed to report its FY2020 ended Jan 31, 2020 results on Feb 16 this year, with a somewhat reduced loss of $5.5 million.
This came on the back of a 13% y-o-y decline in revenue to $7.3 million from $8.4 million, mainly attributable to lower local retail sales revenue as a result of closure of some outlets of Nature’s Farm during the period.
Yet, a new investor is coming on board, with plans to inject new capital and bring Camsing Healthcare to the next stage, and perhaps nurse this company back to health.
On Christmas Day 2021, Camsing Healthcare reached an agreement to accept an investment of $12.6 million from 37-year-old Lin Qiren, who is in the insurance business. The investment will be his wholly-owned vehicle Qiren Holdings.
In an interview with The Edge Singapore, Lin, who founded Qiren Organisation, an authorised representative of AIA Singapore, admits that this will be his first stint investing in a listed company. Although his main interest lies in the Nature’s Farm brand, he does intend for Camsing Healthcare to come out of its rut and have its shares trading once again. Its shares, which last traded at $1.07 March 21, 2019, have been suspended since April 2019.
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“I feel that Nature’s Farm is a strong brand and has a history of over 40 years in Singapore. I think this is a good opportunity for me and I don’t think I can wait another 40 years to find another brand like this,” says Lin, who wants to replicate his “winning model” he used to build his own businesses for Nature’s Farm.
Loan at 12%
The sum to be invested consists of a couple of portions. First, he will extend a cash loan of $1.3 million to be paid in three tranches over a period of 24 months. The loan will carry an interest of 12% per annum.
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Lin will also subscribe for 102.17 million new shares at 4.2 cents worth $11.34 million, plus an option to issue another 167.8 million shares at the same price.
Upon completion of the issuing of new shares, Camsing Healthcare’s total share base will hit 300 million shares, from just below 30 million now. Lin will end up with dominant control of the company with a 90% stake. This is the minimum requirement to keep the company’s listing status without having to privatise. The previous controlling shareholder, Creative Elite Holdings, will see its stake diluted from 83.36% to 8.34%.
According to AVA Associates, a valuer appointed by Camsing Healthcare to appraise the worth of its business, the market value of the company’s equity interest in the business as at Jan 31, 2021, is “reasonably stated” as $900,000.
The company notes that due to its financial condition deteriorating significantly following the suspension of its shares and the Covid-19 pandemic, its prevailing market price of its underlying shares are no longer representative of its valuation.
As at Feb 21, this transaction is still pending approvals from Singapore Exchange (SGX), the Securities Industry Council (SIC) and Camsing Healthcare’s shareholders.
The gross proceeds from the share sale transaction will be used to fund the business recovery and expansion initiatives of Nature’s Farm, Camsing Healthcare’s sole business. The funds will be used by the company to expand its range of products; update its brand image; build up business-to-business (B2B) collaborations; and overhaul its digital strategy.
“Corporate challenges”
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As Camsing Healthcare’s management team told The Edge Singapore in an email interview, plenty of overhaul is needed. “Nature’s Farm faced several challenges, including the emergence of e-commerce competitors, and a lag in terms of digital transformation, which in turn affected its financial performance in recent years,” notes the team.
It also suffers from a limited product range and its brand can be further strengthened especially online.
However, the embattled company had more issues bubbling beneath the surface. For the better part of its four decades, Nature’s Farm as a brand was doing well, and so was Camsing Healthcare as a company — until 2018. In December that year, Camsing Healthcare’s auditors flagged concerns with the audit. Although this issue was conveyed to the management, nothing was properly done to resolve the issue.
Internal tension among the management started to build up surrounding the auditing issues and some “imprudent” investments that did not receive the go-ahead from some of the independent directors. The conflict eventually drove three independent directors — Lau Chin Hock Kenneth Raphael, Ong Wei Jin and Maurice Tan Huck Liang — to resign in March 2019, citing the company’s “tardy” response to the auditing situation and the lack of respect from the management.
After the trio left, SGX suspended the stock and more troubles followed. The company received a letter of demand from United Overseas Bank (UOB) for repayment of $2.2 million, while both chairman and executive director Lo Ching and CEO Hua Min were both suspended from their duties. Lo was suspended due to an arrest by Shanghai authorities, while Hua breached his delegation of authority protocol thrice.
When the pandemic hit, things worsened further. “Camsing Healthcare has faced corporate challenges for the last two to three years, while our main operating subsidiary Nature’s Farm needed to embark on business expansion and renewal initiatives to adapt to market needs and the competition,” the company said in the email interview.
Buying into a dream
Now, with Lin in the picture, how is he planning to turn things around? What’s motivating him to invest in a company many investors have all but forgotten?
Besides founding Qiren Organisation, Lin is also the founder of Sweven Group, a holding company that owns schools, wellness treatment centres, as well as several tech companies that all aim to supplement the target audience of Qiren Organisation — families and the elderly.
In the interview, Lin says he is buying into a dream. And perhaps he is. He explains that it has always been his dream to own a wellness company, along with a financial institution and schools — which he has already achieved.
Lin also believes that the healthcare supplement business is one that can fetch high margins and that with the right product branding and marketing, he could generate a profit.
Apart from using the funds injected into Camsing to boost Nature’s Farm’s branding and online presence, Lin plans to expand the number of Nature’s Farms outlets to some 40 outlets by the end of this year.
Lin notes that not all 12 outlets now are losing money, although there’s difficulty hiring — something Lin would address once the deal is approved. Lin also sees the brand going overseas. He is currently looking to expand the brand into the Malaysian market, but depending on the resumption of cross-border travelling and the current Covid-19 situation, Lin expects this to only take place next year.
Lin sees a potential in the business and has big plans for Nature’s Farm and by association Camsing Healthcare. “I want to take this ‘raw diamond’ that has a lot of opportunities and several patented products, and turn it into a ‘shiny gem’,” he says.
