SYGNUS DRY POWDER DRYING UP ||| COMPANY TO ISSUE PREFERENCE SHARE - YouTube

all right so let's just turn to the  balance sheet of Sygnus all right  

now what we're looking at what we're interested in  is the dry powder or the cash that the company has  

on the balance sheet as we said before the company  will need access to capital in order to grow  

all right so dry powder has a company called  it is necessary for growth now as we also see  

the company makes loans of on average of 2.5  million us dollars per year all right now what  

we're seeing here is that the company has in terms  of dry powder some 3.6 million dollars in cash on  

hand currently all right so that gives the company  enough resources to continue increasing it's a  

loan book in the future now where the company gets  this money is also of importance notice that this  

money that the company has on the balance sheet is  a net proceed of a multi series of capital raise  

in the in in the third quarter so the capital  the company actually borrow that money all right  

in order to have that money currently so the  company constantly be tapping the capital market  

now this is not an issue as long as the capital  market remains open and there is no liquidity  

squeeze in the capital market all right so as long  as the doors of the capital market remain open  

signals will always be able to access capital all  right but we have to keep a tap of whether or not  

the capital market there will be a squeeze in  liquidity in the near future which will close  

the door on Sygnus's ability to access capital  that it desperately needs to grow if any at all  

the company will grow all right now what we'll  find out also is the company has a revolving line  

of credit all right of approximately 3.4 million  dollar that it can access at any time so that is  

access to capital so the company really doesn't  seem to have a problem with accessing capital  

also the company is planning on raising shares  preference shares of up to 14.7 million dollars  

all right in the June period ending June so very  in the near future the company is planning to do  

that now preference share is a bit more expensive  than debt even though it's less costly than equity  

capital all right so now is where the company  is using more expensive mean to access capital  

so the company said that it wants to use this  newly issued preference to launch a new private  

credit financing solutions for business  within the Caribbean all right so that's  

the use of the money that the company will  come to market to pick up in the near future  

also as we stated it is very important  to consider the company's ability to call  

it the money that is bought to it and we  think that the company is having a problem  

here all right so we'll see where receivable  increase from um receivables increase from 39%  

over the last quarter to 4.6 million dollars  so currently the company has 4.6 million dollar  

time tie-up in receivables now if the company  is just able to collect all of those money  

on time and in the full amount then 4.6 million  dollar would be twice the money that the company  

lends out for the for the period because we say  the company lends out an average of 2.5 million  

so that's almost twice the amount of money that  the company lends out all right so instead of  

tapping the capital market constantly for cash  if a company is able to collect its money then it  

can it will gain free or cheap money that it can  continue to on-lend right and grow its portfolio  

so we're looking to see Sygnus grow its portfolio  not from expensive capital not from tapping the  

capital market right but from collecting the money  that is over to it and continuously on-lend those  

money in the future we think that's a cheap source  of cash which a company needs to start accessing

all right so it's been able to collect what  is owed to it is closely related to the tenure  

of the loans that the company makes all right  so we want to look at the tenure of the loan how  

long does the company lend those money for that  is also important so we want to look at that  

as I stated it is very important to look at the  tenure of the investment that the company makes  

all right and what we notice is that the portfolio  investment decline marginally of the tenure  

are the weighted average tenure of the investment  decline marginally to 1.5 years all right and that  

is coming from 2.1 years in 2021 all right so  that's a good look there for Sygnus reducing  

the tenure of its portfolio all right and that was  even slightly down from the 1.8 years in December  

all right so there's a constant reduction of the  company's long tenure so the company continues  

to make shorter term loan all right so the  company attributed this reduction to a huge  

loan that was made the other day for less  than one year all right so they made a loan  

with a maturity of less than one year and  that is what pulled down the tenure of the  

loan portfolio all right so it's a good look  anyways all right so the weighted yield that the  

company is currently making is some 13% versus  11.8 percent as we stated earlier all right so  

it seems that the company spread will widen we  do not know if it's because we do not know if  

the increase that we're seeing in in this yield  is due to the increase in in rates currently  

in the environment or is it that the company is  taking on more risk now we'll have to look at that  

now what we notice is that the portfolio  um the AFC portfolio is not yet added to  

the company's statement all right so whatever so  that has not impacted the weights and the interest  

that we are currently quoting all  right but what we notice is that  

the portfolio for the newly acquired business  as a as a tenure of three years and the yield  

on on its portfolio the average yield is some 10%  all right so that is below the average heal that  

Sygnus is currently enjoying so what that  means is that when we consolidate the result  

that will pull down the yield on Sygnus overall  portfolio also that will also increase the tenure  

on Sygnus overall portfolio again Sygnus has  a tenure of 1.5 years no adding a three-year  

tenure to that and we also see  where the Puerto Rican portfolio is  

some 40% of the Sygnus's overall portfolio  so that's a huge part of the weights  

all right so that will pull the tenure upwards  while at the same time pulling the yield  

that Sygnus is experiencing the increase  in yield it will tend to pull that down