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SINGAPORE - Davis Commodities Limited (NASDAQ:DTCK), a $21.66 million market cap agricultural commodities trader with annual revenues of $132.37 million, plans to expand its sugar trading operations across key Asian markets amid supply shortages and rising consumption, according to a press release statement issued Wednesday. According to InvestingPro analysis, the stock appears slightly undervalued at current levels, presenting a potential opportunity for investors tracking the agricultural commodities sector.
The Singapore-based agricultural commodities trader aims to generate an additional $100 million in annual sugar-related revenue by focusing on markets facing supply constraints, particularly India, Pakistan, and China. This ambitious target represents a significant increase from the company’s current operations, which InvestingPro data shows are operating with notably thin gross profit margins of 1.76%.
In India, where sugar production is projected to decrease by 19% to 25.8 million metric tons in 2024/25 against consumption of 29 million metric tons, the company is engaging with domestic producers to establish procurement partnerships and expand port infrastructure in Gujarat and Maharashtra.
For Pakistan, where domestic sugar prices have reportedly increased beyond Rs168/kg due to export demand from Bangladesh and Central Asia, Davis Commodities is evaluating distribution agreements with producers and improving cross-border logistics.
The company is also exploring collaborations with distributors in China, which maintains steady domestic demand of 15.6 million metric tons despite declining local production.
As part of its operational strategy, Davis Commodities plans to expand procurement pipelines, strengthen risk management systems, and invest in digital tools for market analytics.
The company projects a 50% increase in trading volumes from these initiatives, contributing to its target of surpassing $300 million in total revenue for fiscal year 2026.
Davis Commodities noted that while it has identified potential partners like JDW Sugar Mills in Pakistan and Bright Food Sugar in China, no binding agreements have been executed at this stage.
The company currently distributes agricultural commodities to customers in over 20 countries under its Maxwill and Taffy brands.
In other recent news, Davis Commodities Limited announced a strategic expansion across Africa, Asia, and the Middle East, fueled by a $30 million capital raise. The company aims to address global demand for sugar and rice by scaling procurement volumes and expanding its geographic reach. Additionally, Davis Commodities plans to invest in blockchain technology and Bitcoin reserves, allocating up to 50% of the funds to develop a blockchain-powered platform for tokenizing agricultural commodities. The company is also investing in Real-World Asset (RWA) tokenization, with 15% of the funds initially directed toward Bitcoin reserves. In a separate development, Davis Commodities has entered a joint venture with a Malaysian agri-processing group to export 180,000 metric tons of food-use inputs annually to a major Northeast Asian market. This venture leverages Malaysia’s tax-free status under the ASEAN Free Trade Agreement and is expected to generate USD 117 million in revenue in its first year. These initiatives are part of Davis Commodities’ broader strategy to strengthen its market position and embrace digital asset opportunities.
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