write an investment memo to invest into a furniture manufacturer in Vietnam who produce high-end furnitures to US top customers. The key investment thesis include (i) track records of generating stable profitability and cash flows which were sufficient for the Company to fund its operations and investing in capex without borrowing, (ii) the Company has a good business fundamental indicated by well-organized and state of the art of factories based on our site visit (please add on more details about a good furniture manufacturing companies if any), (iii) strong management team who showed a solid skin in the game (in fact they put in more money when the business in a critical transition period which implies their strong belief in the future success, (iv) an exciting plan with big order book indicated by a $3m deposit from customers for production preparation. The risks of the deal include (i) their downward performance in the last 3 years which we believe is more one-off nature given they moved to a new factory with some disruptions, (ii) their reliance on top US customers which would be mitigated by the high-end end customers who are less sensitive to downturn, (iii) expansion execution risks where they want to build up 2 more factories to reach $50mil revenue target for selling to PE investors in next round that might be in exchange for losses (this is mitigated by their track records in the past).

Date: [Date]

To: [Investment Committee]

From: [Your Name]

Subject: Investment Memo - Furniture Manufacturer in Vietnam

I. Investment Thesis

We recommend investing in a high-end furniture manufacturer based in Vietnam that primarily caters to top customers in the United States. The key investment thesis for this opportunity is as follows:

(i) Track Records of Stable Profitability and Cash Flows: The company has a proven track record of generating stable profitability and cash flows. It has consistently funded its operations and invested in capital expenditures without resorting to borrowing. This financial stability indicates the company's ability to sustain its operations and growth.

(ii) Good Business Fundamentals: Our site visit to the company's factories revealed a well-organized and state-of-the-art manufacturing facility. The company's commitment to maintaining modern infrastructure and technology showcases its dedication to producing high-quality furniture. This is a crucial factor in the success of furniture manufacturing companies, as it ensures efficiency, quality control, and customer satisfaction.

(iii) Strong Management Team: The company boasts a highly competent management team that has demonstrated a solid commitment to the business. During a critical transition period, the management team invested additional funds, showcasing their belief in the future success of the company. This "skin in the game" approach instills confidence in their ability to navigate challenges and capitalize on opportunities.

(iv) Exciting Growth Potential: The company has an exciting plan for expansion, evident from its substantial order book. With a $3 million deposit from customers for production preparation, the company is well-positioned to capitalize on upcoming orders. This not only indicates the demand for their high-end furniture but also provides a strong foundation for future growth.

II. Risks

While we believe the investment opportunity is promising, it is essential to consider the associated risks:

(i) Downward Performance in Recent Years: The company experienced a decline in performance over the past three years. However, we attribute this decline to one-off factors related to the relocation of their factory, which caused disruptions. With the completion of the transition period, we anticipate a return to stable growth and profitability.

(ii) Reliance on Top US Customers: The company's heavy reliance on top US customers poses a risk. However, this risk is mitigated by the fact that these customers belong to the high-end segment, which tends to be less sensitive to economic downturns. Their commitment to purchasing high-quality furniture provides a level of stability to the company's revenue stream.

(iii) Expansion Execution Risks: The company aims to build two additional factories to achieve a $50 million revenue target, attracting potential PE investors in the next round. While expansion carries inherent risks, the company's track record of successful operations and financial stability provides confidence in their ability to execute this plan effectively.

III. Conclusion

Considering the company's track records of stable profitability and cash flows, its well-organized and state-of-the-art factories, the strong management team's commitment, and the exciting growth potential indicated by a substantial order book, we recommend investing in this high-end furniture manufacturer in Vietnam.

While there are risks associated with the recent downward performance, reliance on top US customers, and the execution of expansion plans, these risks are mitigated by various factors, including the company's historical resilience and commitment to quality.

We believe that this investment opportunity aligns with our investment objectives and presents a compelling case for long-term growth and profitability.

Please feel free to reach out if you require any further information or clarification.

Sincerely,

[Your Name] [Your Title/Position] [Your Contact Information]