The new South Korea opportunity.....Naturally Splendid Ships Container of Hemp to Southeast Asia - March 3, 2020
Vancouver, British Columbia - TheNewswire - March 3, 2020 - Naturally Splendid Enterprises Ltd. ("Naturally Splendid", "NSE" or "the Company") (FRANKFURT:50N) (TSXV:NSP) (OTC:NSPDF) announces they have processed a purchase order for a container of hulled hemp seed destined for South Korea.
The shipment of approximately 20 tonnes of hemp seed is being expedited to South Korea.
Naturally Splendid has been receiving increased interest from Southeast Asia looking to Canada for safe efficacious food. Canada's agricultural practices are recognized as amongst the highest standards in the world. Increased inquiries from this region are due to a number of factors that may include the on-going coronavirus that is disrupting distribution channels in Southeast Asia.
In 2016, Naturally Splendid shipped over $5M CDN of hemp seed to South Korea. This new client represents an opportunity in addition to the relationships that Naturally Splendid forged previously in this region.
Naturally Splendid Advisor Mr. Robert Arthurs, a former BC Ministry of International Trade Senior Manager specializing on business throughout Asia, will be assigned the task of assessing the needs of Southeast Asia. Mr. Arthurs reports, "Traditional distribution channels for food throughout Asia have been disrupted and will likely require augmentation from alternative distribution sources. We believe Naturally Splendid can assist in this regard."
Company CEO Mr. J. Craig Goodwin states, "We are committed to providing safe nutritious food across a variety of sectors and distribution channels. Naturally Splendid has previous roots exporting containers of bulk hemp food which I oversaw as CEO in 2016. If demand continues to grow in this region for hemp, we have the experience and logistics to ramp up our volumes for exporting in very short order." **
IMO another good news release! I highlighted the important parts of the NR above and done some digging since a lot of factors have changed since 2016. Canadian farmers grew a huge crop of conventional hemp in 2017, expecting to export the bulk of it to South Korea.
Unfortunately that market evaporated when China and other producers stepped into the Korean market. That created what some called the “Korean hangover” of excess hemp that has dogged the Canadian hemp market for nearly 3 years. Companies that contracted conventional hemp production stopped and a lot of growers still have 2017 hemp seed in storage.
So why is it good news? It’s an additional revenue stream from a
new client that will contribute to the bottom line without any significant capital costs. Shipping bulk hulled seed to South Korea is
not a new process for NSP – as stated they have the experience and logistics to ramp up in short order if the
increased inquiries convert to purchase orders. Craig Goodwin was responsible for the Korean shipments in 2016 and he has a leg up now in 2020 with Robert Arthurs being involved. Mr. Arthurs is familiar with Southeast Asia and has many contacts in the area not just South Korea.
** Seems some people aren’t happy unless there is a revenue number in every news release; there are many good reasons why they aren’t stated. I understand why NSP has put out this news release but my personal preference would have been to just ship the containers while they can and not say anything
;<) So my digging suggests to me that
I,
if I was a buyer, could arrange to ship a 40 foot ocean container with 20 tonnes (44k lbs) of hulled hemp seed delivered to South Korea for $119k CDN. The farmers/producers get around $.50 ->.60 per pound. On top of the actual cost of the seed there are the processing and shipping costs which are included in that price. So the company selling to me has a profit included in that total which I assume would be the similar for NSP shipping to their buying clients.
I looked back at the NSP FS for the 2016 year and the gross margin was ~17% and we know that the bulk shipments brought the overall company margin down. So maybe a safe gross margin to assume would be 8 ->10% on bulk shipments.
I don’t know if this is a “one off” or if it will be an ongoing stream of shipments for awhile but either way, based on the information I was able to dig up, it looks like there are a lot of benefits for NSP to do as many bulk shipments as possible while the opportunity exists. My info came from the public domain so it should be considered “ball park”
:<) *****
“NSP is a very viable business without the Processor’s License!” *****
“Living in the sunshine” Always DYODD DKM