• Sheffield Green is a human resource service provider for the EPCI (Engineering, Procurement, Construction and installation) industry players within the renewable energy industry. These includes onshore wind, offshore wind, solar and green hydrogen companies.
• For 9MFY23 ended 31^st March, Sheffield Green’s revenue grew 4x YoY to US$19 million. This was attributed to an increase in projects secured as well as the number of personnel provided for existing projects primarily in Taiwan and France. Board Directors intend to recommend and distribute dividends of 30% of net profit in FY23 to FY24.
• Sheffield Green sees industry growth through the continued acceleration of decarbonisation and transition to renewable energy and has predominately raised S$6 million to expand its scale of existing business and geographical coverage as well as into complementary offerings, new product lines and other technical services.

Sheffield Green is a human resource service provider for EPCI (Engineering, Procurement, Construction and Installation) that works in the renewable energy industry, which includes onshore wind, offshore wind, solar and green hydrogen. The Group operates mainly in Taiwan, France and Japan and has two main business segments (i) provision of human resource services; and (ii) ancillary services.

Overview and Trends in the Renewable Energy Industry (refer to page 47 of the offer document for a full list)

Sheffield Green believes employment growth in the renewable energy industry will be driven by the following trends:

• Sector growth is fuelled by (a) continued acceleration of decarbonisation and transition to renewable energy, (b) focus on energy security triggered by the Russia and Ukraine conflict, and (c) increasing cost competitiveness spurred by technological innovation and supportive government policies. As a result, worldwide employment in the renewable energy industry grew to 12.7 million in 2021 and is expected to deliver record growth with 38.2 million employment by 2030.
• Limited talent pool of experienced renewable energy professionals and outsourcing trends of human resource functions. To counter fixed manpower costs during low production periods, more renewable energy companies are looking towards a flexible workforce strategy and hence they are outsourcing the hiring process and HR services.
• Increasing focus on the training of local workers due to the local content requirements of various local governments. Increasingly, policies require a certain percentage of goods and services used in a wind energy project to be sourced locally. Hence, there is growing focus on the training and development of local workers to promote economic development and job creation in the local community and support local industries.

Business Strategies/Future Plans (refer to page 44 of offer document for more details)

• Expanding the scale of existing business and geographical coverage to places such as:
  • United States: To further service global clients
  • Japan: Capitalise on the growing offshore windfarm opportunities in Japan
  • Europe: Expand its operations to service clients in the offshore wind, onshore wind, and solar industry
• Expanding into complimentary offerings, new product lines and other technical services such as:
  • Ship chandelling and catering business in Taiwan
  • Acquisition and/or strategic partnership opportunities with third-party service providers
  • Diversify existing business by providing training and development through training schools and centres in Taiwan

Competitive Strengths (refer to page 42 of offer document for more details)

• Offers a comprehensive range of human resource services across the entire renewable energy value chain
• Has established local presences and gained expertise in key geographical locations such as Taiwan, France and Japan
• Has the capability and capacity to source for and procure a large number of workers to meet the manpower demands of large-scale projects
• Established track record and market reputation, with 8 major renewable energy players

Key Risks (refer to page 53 of offer document for full list of risk factors)

• The results of operations and cash flows may fluctuate depending on the availability and timing of contract awards, renewals, maturity or termination and the Group requires a high level of working capital to sustain its operations
• There can be no assurance that the Group will continue to successfully bid for and secure tenders for projects on similar terms
• The Group is dependent on the renewable energy industry which the Group’s clients operate in, given that there is no assurance that the demand for the sector will sustain

Financials

• According to the FY2022 audited financial statements, total revenue increased 97.6% year-on-year (y-o-y) from US$3.9 million to US$7.8 million. Compound annual growth rate (CAGR) for revenue is approximately 75% from FY2020 to FY2022. This was mainly due to: (i) two new projects secured in Taiwan, six new projects in France and one new project in Japan; and (ii) increase in personnel provided for the existing projects in Taiwan and France.
• Gross profit increased by 33.3% y-o-y in FY2022 while gross profit margin decreased by 7.7% from 23.5% in FY2021 to 15.8% in FY2022 due to an increase in the costs associated with the increase in numbers of workers mobilised. Net profit for FY2022 decreased by 174.2%, posting a net loss of US$0.1 million.
• For 9MFY2023 ending 31 March, revenue grew 305.6% y-o-y to US$19 million due to the increase in projects secured as well as the number of personnel provided for existing projects primarily in Taiwan and France.
• The Directors intend to recommend and distribute dividends of 30% of the Company net profit after tax attributable to equity holders of the Company for FY2023 to FY2024.

Valuations

• According to the offer document, Sheffield Green’s audited FY2022 earnings per share (EPS*) was 0.04 cents (based on pre-Offering share capital of 162.3 million shares).
• This implies a FY22 price-to-earnings (P/E) ratio of 625x based on offer price of S$0.25.
• After adjusting for the estimated net proceeds of the Offering and based on the post-Offering share capital for 186,255,600 shares, the net asset value (NAV) is S$0.051.

*EPS is computed based on the combined net profit of US$49,659 for Pro Forma FY2022 divided by the pre-Offering share capital of 162,255,600 shares.

SGX’s Human Resource Provider Stocks

SGX lists another human resource provider, HRnetGroup, which has a market capitalisation of about S$680M, P/E ratio of 11.2x and a 12-month dividend yield of 5.4%.

Source: SGX, Bloomberg (as of 27 Oct 2023)

Business Segments of Sheffield Green

• Provision of human resource: Provision of human resources in the renewable energy industry
• Ancillary services: Provision of a range of end-to-end ancillary services related to the provision of personnel and include visa and work permit application, training and deployment logistics.
• Provision of human resource services drew in most of the Group’s revenue at 88.1% for FY2022.
• Main geographical locations of external customers’ operations: Taiwan, France, and Japan

IPO Details

• Issue price at S$0.25.
• Total of 24,000,000 shares under the offering
  • 3,600,000 Public Offer Shares
  • 20,400,000 Placement Shares
• Use of gross proceeds of S$6 million:
  • Expanding the scale of existing business and geographical coverage: 35.0%
  • Expanding into complementary offerings, new product lines and other technical services: 17.5%
  • General working capital purposes: 10.5%
  • Listing expenses to be borne by Sheffield Green: 37.0%

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