SunMoon: Late payment for credit sales due to interested parties

SUNMOON, in response to Singapore Exchange queries on its third-quarter results, said its average trade receivables turnover of 78.4 days - longer than the 15 to 60 days granted to its customers for credit sales - was due to an interested party, Shanghai Yiguo E-commerce, and Yiguo's related companies having longer repayment periods This was in addition to a few customers being slow on payment. Excluding these, trade receivables turnover would be 45 days.

For the quarter, SunMoon had made S$14.3 million in interested party transactions to Yiguo, which had an average collection period for sales of 108 days. Sales to Yiguo made up 70 per cent of the group's Q3 revenue.

The fruits supplier clarified that a S$187,000 provision was related to one of the slow-paying customers on credit sales, and said that about 44 per cent of total trade receivables as at Dec 31, 2018 had been collected as at Feb 28, 2019.

The company said it suffered a gross loss of S$456,000 due to avocado being sold below cost for the third quarter - a result of depressed prices in China's competitive market. The weakening of the yuan hurt its gross margin as purchases for China were in made in US dollars, while sales were in yuan.

In explaining the the directors' optimism regarding the group's operating results, SunMoon said the group was moving away from sales of products with no or negative margin, and expected to reduce the gross loss from such sales for the fourth quarter.

It said that since the company has been in an accumulated loss position, its directors did not recommend a dividend for the quarter.

SunMoon shares were flat at S$0.036 as at 10.41am on Friday.