Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May 2024

 

Commission File Number: 001-41804

 

Davis Commodities Limited

 

10 Bukit Batok Crescent, #10-01, The Spire

Singapore 658079

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F ☒    Form 40-F ☐

 

 

 

 

 

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release – Davis Commodities Limited Announces Financial Results for Fiscal Year 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Davis Commodities Limited
Date: May 15, 2024	By:	/s/ Li Peng Leck
	Name:	Li Peng Leck
	Title:	Executive Chairwoman and Executive Director (Principal Executive Officer)

 

 

 

 

 

 

 

 

 

3

 

Exhibit 99.1

 

Davis Commodities Limited Announces Fiscal Year 2023 Financial Results

 

SINGAPORE, May 15, 2024 (GLOBE NEWSWIRE) -- Davis Commodities Limited (Nasdaq: DTCK) (the "Company" or "Davis Commodities"), an agricultural commodity trading company that specializes in trading sugar, rice, and oil and fat products, today announced its financial results for the fiscal year ended December 31, 2023.

 

Ms. Li Peng Leck, Executive Chairwoman and Executive Director of Davis Commodities, commented, “I’m glad to present our financial results for fiscal year 2023. During this period, our business has maintained profitability across all products, being sugar, rice, and oil and fat products. Particularly noteworthy is the exceptional growth in revenue from the sale of oil and fat products, which surged by 171.0% compared to the previous fiscal year. Despite some headwinds in the form of a slowdown in the demand for sugar in Indonesia and Vietnam, we have made progress in our business expansion, achieving revenue growth in Africa, the Philippines, Thailand, and Singapore. We believe the results demonstrate the strength of our business strategies in the context of uncertainties from geopolitical events, government policies, and economic conditions. We are confident about our business prospects, buoyed by our proven track record in successful strategic planning and our ability to adapt to evolving macroeconomic landscapes. Looking ahead, we plan to continue expanding our distribution channels and solidifying our market presence. We also expect to leverage the longstanding relationships with our business partners to capitalize on opportunities in emerging markets with high demand for our products. We believe all of such endeavors will enable us to deliver sustainable returns and generate enhanced value for our shareholders.”

 

Fiscal Year 2023 Financial Results

 

Revenue

 

Total revenues of the Company were US$190.7 million for fiscal year 2023, decreased by 7.7% from US$206.7 million for fiscal year 2022. This decrease was mainly attributable to a decrease in demand for sugar and rice from the Company’s customers in Southeast Asia, notably, Indonesia and Vietnam.

 

		For the Fiscal Years Ended December 31,
		2023												2022
(US$ thousands)		Revenue				Cost of Revenue				Gross Margin				Revenue				Cost of Revenue				Gross Margin
Sale of sugar			116,443				113,110				2.9%				154,757				145,071				6.3%
Sale of rice			26,440				25,325				4.2%				34,200				32,099				6.1%
Sale of oil and fat products			47,623				45,065				5.4%				17,568				16,489				6.1%
Sale of others			218				195				10.6%				192				181				5.7%
Total			190,724				183,695				3.7%				206,717				193,840				6.2%

 

·

Revenue from sales of sugar was US$116.4 million for fiscal year 2023, which decreased by 24.7% from US$154.8 million for fiscal year 2022. This decline was attributable to a decrease in demand for sugar from our customers in Southeast Asia, notably, Indonesia and Vietnam. Additionally, the decrease was linked to the market disruption caused by India’s decision to ban sugar exports.

 

·

Revenue from sales of rice was US$26.4 million for fiscal year 2023, which decreased by 22.7% from US$34.2 million for fiscal year 2022. The decline was a direct consequence of reduced demand for rice, primarily stemming from the export ban imposed by the Indian government. This ban limits the availability of Indian rice in the international market, disrupting the established trade pattern. The Company is actively seeking alternative options for rice sourcing, to mitigate the adverse effects of the export ban on the Company’s revenue stream.

 

·

Revenue from sales of oil and fat products was US$47.6 million for fiscal year 2023, which increased by 171.0% from US$17.6 million for fiscal year 2022. The increase was attributable to the palm oil prices which have experienced a significant upward trend over the past three years, reaching an all-time high in 2022. In 2023, there was a price drop, leading to an increase in demand.

 

·

Revenue from sales of others was US$0.2 million for fiscal year 2023 The sales of other products were random sales during the year, specifically, sales of tomato puree and creamer.

 

 

 

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A breakdown of revenue by geographic regions for the fiscal years ended December 31, 2023 and 2022 is summarized below:

 

		For the fiscal years ended December 31,
(US$ thousands)		2023				%				2022				%				Amount				Change (%)
		US$’000								US$’000								US$’000
Africa		$	80,637				42.3				56,863				27.5				23,774				41.8
China			17,731				9.3				16,629				8.0				1,102				6.6
Indonesia			22,502				11.8				79,645				38.5				(57,143	)			(71.7	)
Vietnam			9,109				4.8				28,663				13.9				(19,554	)			(68.2	)
Philippines			19,372				10.2				3,237				1.6				16,135				499.0
Thailand			13,120				6.9				1,980				1.0				11,140				562.6
Singapore			18,889				9.9				8,808				4.3				10,081				114.5
Other countries			9,364				4.8				10,892				5.2				(1,528	)			(14.0	)
Total revenue		$	190,724				100.0				206,717				100				(15,993	)			(7.7	)

 

·

Revenue from the Africa market experienced growth of 41.8%. Africa’s contribution to total revenue increased to 42.3% for fiscal year 2023, from 27.5% for fiscal year 2022. The increase was driven by a rise in revenue generated from oil and fat products. The Company strategically engaged with specialized traders in oil and fat products, which contributed significantly to the growth in this market.

 

·

Revenue from China market demonstrated moderate growth, representing a 6.6% growth. The increase was attributable to the Company’s successful penetration into liquid sugar sales within China.

 

·

Revenue from the Indonesian market experienced a decline of 71.7%, which can be attributed to challenges in securing tenders for sugar imports, affecting the Company’s ability to generate revenue from this market.

 

·

Revenue from the Vietnam market decreased by 68.2%, primarily because in Vietnam, the government took action to regulate the impact of the price of imported sugar to their domestic sugar industry by imposing duties and quota restrictions, which led to the decrease in demand.

 

·

Revenue from the Philippines market increased significantly by 499.0%, primarily due to two key factors. Firstly, industrial users in the country expanded their capacity, leading to higher demand for our products. Secondly, the Philippine government issued sugar import permits in response to a poor local crop yield, which further boosted our revenue in the region.

 

·

Revenue from the Thailand market showed notable growth, representing a 562.6% increase, which was attributed to the expansion of capacity in Thailand’s Export Processing Zone (EPZ) factories, specifically to cater to the Chinese market. This growth was facilitated by the Free Trade Agreement (FTA) between Thailand and China, enabling increased exports to China from the EPZ factories.

 

·

Revenue from the Singapore market increased by 114.5%, which was mainly attributed to the expansion of capacity among local general trade and industrial users. This surge underscores the widespread acceptance of our sugar brand in the Singapore market, further contributing to our revenue growth.

 

·

Revenue from other countries decreased by 14.0%. This decrease was a result of a mixed performance across various countries, where some experienced increases while others saw decreases. These fluctuations, although present, were not significant enough to offset the overall decline in revenue.

 

 

 

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Cost of Revenue

 

Cost of revenue was US$183.7 million for fiscal year 2023, which decreased by 5.2% from US$193.8 million for fiscal year 2022. The decrease in cost of revenue was primarily due to the decrease in revenues as stated above, due to a reduction in demand for the Company’s products (other than oil and fat products) from the Company’s customers. Accordingly, the Company’s cost of revenues has decreased correspondingly.

 

Gross Profit and Gross Margin

 

Gross profit was US$7.0 million for fiscal year 2023, which decreased by 45.4% from US$12.9 million for fiscal year 2022. As a result of the decrease in revenues, there was a corresponding decrease in the cost of revenues.

 

Gross margin was 3.7% for fiscal year 2023, compared to 6.2% for fiscal year 2022. The decline in gross margin occurred due to procurement and pricing pressures in certain markets, together with rising supply chain costs.

 

Operating Expenses

 

Operating expenses of the Company were US$5.9 million for fiscal year 2023, which decreased by 22.5% from $7.6 million for fiscal year 2022.

 

·

Selling and marketing expenses were US$2.4 million for fiscal year 2023, which decreased by 54.7% from US$5.3 million for fiscal year 2022. The decrease was primarily due to a decrease in sales-related expenses and commissions payable.

 

·

General and administrative expenses were US$3.4 million for fiscal year 2023, which increased by 47.8% from US$2.3 million for fiscal year 2022. The increase was primarily due to an increase in employee benefits, office running cost, legal and professional fees, impairment losses, directors’ and officers’ liability insurance and overseas office expenses.

 

Other Income and Interest Expense

 

Other income was US$0.2 million for fiscal year 2023, which decreased by 30.5% from US$0.3 million for fiscal year 2022. This decrease was primarily due to reduced government grants and the absence of miscellaneous claims from customers and suppliers compared to the previous fiscal year 2022.

 

Interest expense was US$110,000 for fiscal year 2023, which increased by 233.3% from US$33,000 for fiscal year 2022, as the Company had a higher amount of bank borrowings in fiscal year 2023, compared to fiscal year 2022. During fiscal year 2023, the Company obtained a loan for a new Company vehicle that was newly acquired The Company also repaid interest to a related party for a loan provided to one of the subsidiaries of the Company.

 

Profit before Tax and Income Tax Expense

 

Profit before tax was US$1.2 million for fiscal year 2023, which decreased by 77.7% from US$5.5 million for fiscal year 2022. Correspondingly, income tax was US$0.1 million for fiscal year 2023, which decreased from $0.9 million for fiscal year 2022.

 

Net Income

 

Net income was US$1.1 million for fiscal year 2023, which decreased by 76.5% from US$4.6 million for fiscal year 2022.

 

Basic and diluted earnings per share were US$0.04 for fiscal year 2023, compared to US$0.20 for fiscal year 2022.

 

 

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Financial Condition

 

As of December 31, 2023, the Company had cash and cash equivalents of US$1.3 million, compared to US$2.5 million as of December 31, 2022.

 

Net cash generated by operating activities was US$1.8 million for fiscal year 2023, compared to net cash used in operating activities of US$1.9 million for fiscal year 2022. This increase was primarily due to a US$1.6 million reduction in inventory, along with decreases in tax payables and deferred offering costs. However, these decreases were offset by a substantial increase in trade and other receivables, amounting to US$10.8 million, as well as a corresponding increase in trade and other payables totaling US$8.3 million. Notably, allowance for expected credit losses were recognized during the fiscal year 2023.

 

Net cash used in investing activities was US$208,000 for fiscal year 2023, compared to net cash provided by investing activities of US$42,000 for fiscal year 2022. This substantial increase in cash outflow was primarily due to capital expenditures totaling approximately US$296,000, offset by interest income of approximately US$88,000.

 

Net cash used in financing activities was US$2.8 million for fiscal year 2023, compared US$2.6 million for fiscal year 2022. During fiscal year 2023, the Company received proceeds from an offering totaling approximately US$3.1 million, after netting off related expenses, and proceeds from finance leases totaling approximately US$0.14 million. However, these proceeds were partially offset by loan repayments and loan to a related party.

 

About Davis Commodities Limited

 

Based in Singapore, Davis Commodities Limited is an agricultural commodity trading company that specializes in trading sugar, rice, and oil and fat products in various markets, including Asia, Africa and the Middle East. The Company sources, markets, and distributes commodities under two main brands: Maxwill and Taffy in Singapore. The Company also provides customers of its commodity offerings with complementary and ancillary services, such as warehouse handling and storage and logistics services. The Company utilizes an established global network of third-party commodity suppliers and logistics service providers to distribute sugar, rice, and oil and fat products to customers in over 20 countries, as of the fiscal year ended December 31, 2023. For more information, please visit the Company’s website: ir.daviscl.com.

 

Forward-Looking Statements

 

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may,” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.

 

For more information, please contact:

 

Davis Commodities Limited

Investor Relations Department

Email: [e-mail]

 

Ascent Investor Relations LLC

Tina Xiao

Phone: [phone]

Email: [e-mail]

 

 

 

 

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DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Amount in thousands, except for share and per share data, or otherwise noted)

 

		As of December 31,
		2022				2023
		US$’000				US$’000
Assets
Current assets:
Cash and cash equivalents			2,540				1,330
Accounts receivable, net			4,656				15,267
Prepaid expenses and other current assets			7,001				6,131
Deferred offering costs			1,129				–
Inventory			2,176				537
Total current assets			17,502				23,265
Property, plant and equipment			399				633
Right-of-use asset			–				73
Loan to a related party			–				5,907
Total non-current assets			399				6,613
TOTAL ASSETS			17,901				29,878
Liabilities
Current liabilities:
Bank loans - current			157				207
Lease payable - current			–				36
Finance lease - current			–				29
Accounts payable			5,096				14,323
Accruals and other current liabilities			4,749				3,850
Income taxes payable			1,357				713
Total current liabilities			11,359				19,158
Bank loans – non-current			528				323
Lease payable – non-current			–				38
Finance lease – non-current			–				101
Deferred tax liabilities			1				–
Total non-current liabilities			529				462
TOTAL LIABILITIES			11,888				19,620
Commitments and contingencies			–				–
Shareholders’ equity
Ordinary shares US$0.000000430108 par value per share; 232,500,000,000 authorized as of December 31, 2022 and 2023; 24,500,625 shares issued and outstanding**			*				*
Additional paid-in capital			–				3,151
Merger reserve			1,113				1,113
Retained earnings			4,895				5,981
Accumulated other comprehensive income			5				13
Total shareholders’ equity			6,013				10,258
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			17,901				29,878

 

*	Denotes amount less than US$’000.
**	Retrospectively restated for the effect of a 2,325-for-1 share subdivision.

 

 

 

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DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amount in thousands, except for share and per share data, or otherwise noted)

 

		For the years ended December 31,
		2021				2022				2023
		US$’000				US$’000				US$’000
Revenues			194,239				206,717				190,724
Cost of revenues			(181,994	)			(193,840	)			(183,695	)
Gross profit			12,245				12,877				7,029
Operating expenses:
Selling and marketing expenses			(5,396	)			(5,307	)			(2,439	)
General and administrative expenses			(1,871	)			(2,287	)			(3,443	)
Total operating expenses			(7,267	)			(7,594	)			(5,882	)
Income from operations			4,978				5,283				1,147
Other income/(expense):
Other income			671				285				198
Interest expense			(48	)			(33	)			(110	)
Total other income			623				252				88
Income before tax expense			5,601				5,535				1,235
Income tax expense			(901	)			(920	)			(149	)
Net income			4,700				4,615				1,086
Other comprehensive income
Foreign currency translation loss, net of taxes			(3	)			(2	)			8
Total comprehensive income			4,697				4,613				1,094
Net income per share attributable to ordinary shareholders
Basic and diluted		$	0.20			$	0.20			$	0.04
Weighted average number of ordinary shares used in computing net income per share
Basic and diluted*			23,250,000				23,250,000				24,500,625

 

*	Retrospectively restated for the effect of a 2,325-for-1 share subdivision.

 

 

 

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DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount in thousands, except for share and per share data, or otherwise noted)

 

 

		For the years ended December 31,
		2021				2022				2023
		US$’000				US$’000				US$’000
Net income			4,700				4,615				1,086
Adjustments:
Depreciation and amortization			54				58				62
Unrealized loss on derivative contract at fair value			(389	)			218				–
Allowance for expected credit losses			–				–				500
Impairment loss for damaged inventory			–				–				16
Bad trade debts written off			–				–				2
Interest expense			46				33				103
Interest expense on finance lease			–				–				2
Interest expense on lease liability			2				*				5
Interest income			(53	)			(56	)			(88	)
			4,360				4,868				1,688
Changes in operating assets:
Decrease/(increase) in inventories			241				(2,082	)			1,624
(Increase)/decrease in margin deposits			(599	)			559				571
(Increase)/decrease of accounts and other receivables			(11,140	)			4,146				(10,808	)
(Increase)/decrease in deferred offering costs			–				(1,129	)			1,129
Increase/(decrease) in accounts and other payables, and accruals			10,433				(8,727	)			8,253
Decrease in amount due from directors			(990	)			*				–
Decrease in operating lease liabilities			–				–				(3	)
Increase/(decrease) in income tax payable			910				419				(645	)
Cash provided by/(used in) operating activities			3,215				(1,946	)			1,809
Interest received			53				56				88
Purchase of property, plant and equipment			(11	)			(14	)			(296	)
Cash provided by/(used in) investing activities			42				42				(208	)
Amount due to related parties			(157	)			*				–
Loan to a related party			–				–				(5,907	)
Issuance of share capital			–				*				*
Dividend paid			–				(3,001	)			–
Net proceeds from offering			–				–				3,151
Proceeds from bank borrowings			256				575				–
Proceeds from finance lease			–				–				144
Repayment of bank borrowings			(2,039	)			(146	)			(155	)
Interest paid			(46	)			(33	)			(28	)
Principal payment of finance lease			–				–				(14	)
Principal payment of lease liabilities			(38	)			(38	)			–
Payment of interest on finance lease			–				–				(2	)
Payment of interest on lease liabilities			(2	)			*				*
Cash (used in)/provided by financing activities			(2,026	)			(2,643	)			(2,811	)
Net change in cash and cash equivalents			1,231				(4,547	)			(1,210	)
Cash and cash equivalents as of beginning of the year			5,856				7,087				2,540
Cash and cash equivalents as of the end of the year			7,087				2,540				1,330
Supplementary Cash Flows Information
Cash refunded/(paid) for taxes			9				(499	)			(791	)
Operating lease asset obtained in exchange for operating lease obligations			–				–				150
Dividend that was offset against loan assumed by shareholder/director			(2,051	)			(671	)			–

 

*	Denotes amount less than US$1,000.

 

 

 

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