Estonia
Manufacturing
Closes Jan 29, 2021 23:59
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FINEST - HALL FACTORY

Be part of a growth story of a modern industrial company

236 100 € (118%)

of 200 000 - 400 000 € goal funded

6 days to go

7,34 % to 13,68 % of company offered
250 € minimum investment
Invest

Quick Pitch

FinEst-Hall Factory is expanding production and wants to raise up to 400,000 euros from Fundwise investors. The capital will be invested in the equipment and working capital. 

The company's total investments are 2.7 million euros, of which 2.2 million euros are invested in equipment and 0.5 million euros in working capital. The lease will cover 1.3 million euros (48.6%) of the investments, 1.0 million euros (36.7%) will be financed by MES (decision made), and 0.4 million euros (14.7%) will be raised from Fundwise investors.

FinEst-Hall Factory OÜ is the largest manufacturer and installer of PVC halls in Estonia. The company has been operating for ten years and today employs 27 people. The production is located on rented premises, about 30 kilometers from Tallinn in Kohila Parish, Pahkla village. The leasable area is 1861m2, including an office of around 150m2. A 712-square-meter PVC coating production building is located 10 km away. The primary production makes up almost 75% of the turnover, installation about 10%, the plasma cutting machine for sale nearly 10% and other services 5% (transport, metal scrap). In 2019, the Estonian market accounted for 60% of turnover and Finland for 40%.

Last year, the company's sales revenue amounted to 4.6 million euros, a 77.3% increase compared with previous revenue. Operating profit before depreciation (EBITDA) amounted to 0.24 million euros, accounting for 5.4% of net sales. Last year's net profit was 0.12 million euros. The average number of employees for the year was 25. At the end of 2019, loan liabilities amounted to 0.45 million euros and equity to 0.32 million euros. Considering the size of debt liabilities and EBITDA, the company's debt burden is rather modest, and the risk of over-borrowing is low.

The largest customers in Estonia are sellers of grain and wood pellets, such as Baltic Agro and PK Terminal.

Steel Express Haldus OÜ (owner 100% Jaanus Laane) forms a group with the subsidiaries FinEst-Hall Factory OÜ (participation 100%; production of PVC halls) and FinEst-Hall Baltic OÜ (100%; sales of halls). In addition, Steel Express Haldus OÜ owns the existing production real estate in Rapla County, which is leased to FinEst-Hall Factory OÜ for the production of PVC halls based on a lease agreement. All equipment, tools, and stocks necessary for production are located in the balance sheet of FinEst-Hall Factory OÜ.

Problem & Solution

Problem:

  • Insufficient warehouse and production space for companies to increase business volume and inventories;
  • construction high cost and long lead time for warehouse and production premises. 

Solution:

  • PVC hall with fast delivery and a clear price advantage;
  • PVC hall offers an opportunity to use the existing production area more efficiently, transferring materials, finished and semi-finished products from the production area to the warehouse area created with the PVC hall.

 

Product/Service Details

PVC hall consists of a construction made of galvanized steel profiles covered with a PVC cover. Galvanizing provides protection for all steel parts against corrosion in a normal environment for decades. PVC covers are produced from practically maintenance-free PVC fabric purchased from the best German and Finnish factories. All covers required for hall projects are made in-house from the purchased fabric.

The use of PVC halls is extensive: storage areas, production areas, storage facilities (pellets, grain), and various maintenance areas. The factory-made metal structures are delivered for installation on the site. The modules are formed on-site, i.e. the so-called interconnected arches are attached to the platforms with steel piles rammed into the ground. Depending on the installation method, all halls can be later moved or relocated. Also, existing halls can be easily expanded.

In addition to PVC halls, the company offers awnings and PVC tunnels if necessary. Awnings can be used as an additional and flexible space for storing goods/products, either on the side/end of an existing building or elsewhere in the territory. The PVC tunnel is a quick and easy way to interconnect different buildings.

The widths of PVC halls reaches between 10-50 meters, and the halls usable floor area from ​​60m2 - 6000m2. To this date, the company has installed over 180 halls, with a total volume of approx. 200,000 m2

 

Business model

At present, both in Estonia and Finland, all products are sold directly to the end consumer (B2B). The installation and subsequent maintenance of the halls are also performed independently by the FinEst-Hall Factory. Metal constructions and PVC covers for production and individual projects are produced in-house. Galvanizing of structures and accessories (doors, fans, Etc.) are purchased. Local resellers/partners are planned to be used to enter new markets, including Sweden, Norway, Denmark, and Russia.

Market

The market volume of PVC halls in the target markets (Estonia, Finland, Sweden, Norway, and Denmark) is estimated at 285 million euros. In Estonia, the market volume reaches approximately 15 million euros, of which FinEst-Hall Factory has a market share of almost 20%. In Finland, the market share is about 2.5%. Determining the exact size is somewhat complicated, as the metal structure required for the halls is also produced by companies not directly involved in the production of the halls.

Traction & Accomplishments

  • FinEst-Hall Factory OÜ has achieved a strong market leader position in Estonia and created stable supply chains in the Finnish market.
  • From 2018 to 2019, the company's total business volume grew by an average of 60% per year.
  • In the fourth quarter of 2018, FinEst-Hall Factory started to produce their own PCV covers (till then, the company was buying in this service from outside). 

How We’re Different

  • FinEst-Hall Factory OÜ is the largest provider of complete solutions in the field of PVC halls in Estonia.
  • More than ten years of experience.
  • Experience in managing large-scale cross-border projects.
  • We are striving and motivated for future developments.
  • We strongly believe in competitive/fair pay and profit-based performance pay, that creates a motivated and stable team.
  • Strong portfolio of well-known and long-term clientele. 

Uses of Funds & Timeline

The company's goal is to double the current business volumes over the next five years and reach a sales revenue of 10 million euros by 2024. To achieve this goal, the company needs investments in both technology and working capital.

We also need more production space than before. A lease agreement has been signed for the new production space, and the move to the new building will take place at the end of the first quarter of 2021. The new building has twice as much production space as before, thus enabling a significant improvement in the current production efficiency, bringing together the processes that have been previously divided between two separate buildings. 

The company's investment needs in the period 2020-2024 are 2.7 million euros, including 2.2 million euros in equipment and 0.5 million euros in working capital. 3D tube laser has the largest share of devices, accounting for almost 50% of the total machinery investment. The aim of the investments is to improve the speed of existing processes significantly. Thereby reducing the cost of the product, the need for additional personnel, and improving the quality of the products. The result is faster delivery, more stable quality, and a competitive price. During the forecast period, the need for working capital is estimated at 9% of sales revenue.

Investment schedule:

1. 2020: EUR 0.117 million;

2. 2021: EUR 1.45 million (including 3D tube laser in the amount of EUR 1.13 million);

3. 2022: EUR 0.3 million;

4. 2023: EUR 0.06 million;

5. 2024: EUR 0.25 million.

Obligations to Investors, Profit Distribution

The company offers its investors the opportunity to receive a share of the dividend income and increase the value of the acquired share over time. In the period 2020-2022, the company will make the investments necessary for the growth shown in the forecasts, and in this period, no dividends will be paid to investors. The earned profit will be refinanced to achieve strategic goals. The first dividend payments will be made in 2023 (for the year 2022). The company promises to pay at least 30% of pre-tax profits as dividends.

Strategically, however, the company aims to list its shares on the Nasdaq Baltic First North market to increase its visibility and transparency, providing investors with more liquidity through the possibility to trade shares and make the shares available to a large number of potential investors.

Until listing on the First North secondary market, investors will be provided with a secondary market through the Ignium digital exchange solution.

Risks and Mitigation

Name
Risk
Mitigation
COVID-19 Pro-longered lead time for cross-border installations hedging by contracts
COVID-19 Declining demand hedging entering new markets