Account Profile

As of March 1, 2021

Account Name: First Star Trading Corporation

Address: 35 Judge Crisostomo St., Diliman, Quezon City
Nature of Business: Retail and wholesale trading of household appliances
Principal Owners:
Frederick U. Reynes (63 years old) – President and CEO (55%)
Alicia E. Reynes, CPA (61 years old) – VP for Finance (20%)
Engr. Fred Albert E. Reynes (40 years old) – VP for Operations (10%)
Atty. Alice Jasmine Reynes-Domingo (35 years old) – Corporate Secretary (10%)
Dominic S. Domingo (33 years old)– Member of the Board of Directors (5%)

Background

1. First Star Trading Corporation is a family-owned corporation which is engaged in the distribution
of household appliances.
2. It started as Prime Star Sales and Marketing Inc in 1987 under the management of the siblings
Frederick Reynes and Joseph Reynes. It was engaged in the retail and wholesale trade or furniture
and household appliance. In 2000, due to some personal issues, the brothers parted ways and
decided to close shop. However, Frederick, the younger brother, decided to keep the household
appliance distribution business. He then started First Star Trading the year after and asked his
wife and children to help.
3. Frederick U. Reynes graduated from the University of the Philippines Manila with a degree in
Social Science major in Area Studies. Upon graduation, he initially worked for an NGO to gain
experience but after a year, he resigned and helped in their family business. On the other hand,
Alicia Reynes is a Certified Public Accountant and a graduate of BS Accountancy from the
University of the East. Before marrying Frederick, she worked for the Araullo and Company
Accounting Firm in Makati. She is the current VP for Finance of their company.
4. Engr. Fred Albert E. Reyes is an Electrical Engineer and a graduate of the University of the
Philippines Diliman. He previously worked as an overseas worker in Dubai but decided to help in
the family business. In addition, Atty. Alice Jasmine Reynes – Domingo is the current Corporate
Secretary. She finished her Business Economics degree from the University of the Philippines
Diliman and pursued law at the Ateneo de Manila School of Law. Prior to joining their company,
she had two-year stint at the Sycip, Salazar, Hernandez and Gatmaitan Law Firm. She is married
to Dominic S. Domingo who owns 5% of the company. Prior to joining the company, Mr. Domingo
worked for the Bank of the Philippine Islands as a Senior Relationship Manager and an Assistant
Vice President under the Corporate Banking Group.
5. Main products include airconditioning units, electric fans, rice cooker, induction cooker and
microwave oven. During summer, most of their sales come from electric fans and airconditioning
units while during December, most of their sales come from rice cooker and microwave oven.
6. They usually have P100MM-worth of inventory at any given time. These supplies come from the
following:
a. Concepcion Durables – credit term: 30-60 days
b. Electronics Excellence – credit term: COD-60 days
c. First Philippine Marketing – credit term: 30-90 days
d. Xmart Manufacturing – credit term: 30-90 days
e. M&L Tricorner Manufacturing – credit term: COD-60 days
7. On the other hand, client gives an average of 60-day credit term to their customers
a. My Home – credit term: 90 – 210 days
b. Appliance ng Nanay Mo – credit term: 60 – 180 days
c. My Homey Home – credit term: 60 – 180 days
d. Appliance Shop Galore – credit term: 30 – 60 days
e. Love, Appliance Shop – credit term: COD – 60 days
8. Currently, the client’s main banks are BPI and Security Bank where they have the following
Working Capital Line facilities:

Bank Facility Balance Collateral Remarks

BPI P50MM P40MM CS Expiry: November 30, 2021
Security Bank P30MM P10MM CS Expiry: February 28, 2021
TOTAL P80MM P50MM

9. For the year 2020, they recorded a P500MM sales which is 38% lower that their 2019 sales of
P800MM. This is both for the wholesale and retail sale (both online and in-store). Gross Profit
Margin was at 30% and Net Profit Margin at 10%.
10. For their retail business, they have their physical store along Commonwealth under the name First
Star Appliance Store which is a 500 sqm building owned by Sps. Reynes.
11. For their wholesale business, they have 5 delivery trucks that deliver to their clients within Metro
Manila.
12. Client has been a depositor of the bank since 2010. Their usual deposit balance is around P20MM.
They also have a time deposit under the name of Sps. Frederick and Alicia Reynes in the amount
of P20MM.
13. Aside from Metrobank, they also have bank accounts with BPI and Security Bank.
14. Client disclosed that moving forward, they plan to work with the large appliance stores; hence,
the need to beef up their inventory. In turn, they need to have a bigger space. In fact, they have
just sealed a deal with Waltermart Corporation where they will supply appliances for the former’s
department stores in Metro Manila.
15. Hence, they are looking at purchasing and renovating a 1000 sqm warehouse in Old Balara,
Quezon City which is for sale for P50MM. Terms of payment shall be an upfront payment of 50%
of the total contract price, 25% on the cancellation of the annotation of encumbrance of the
Philippine National Bank and the remaining 25% once the title has been transferred to Sps
Frederick and Alicia Reynes.
16. Based on the credit checking, there were a number of closed credit cards under the name of
Frederick and Engr. Fred in 2006. These cards were under Citibank and PBCom. Clients said that
these cards were given to them voluntarily by the said banks, but they had disputes with the
balance.
17. However, just like any other business, the clients were greatly affected by the implementation of
the Enhanced Community Quarantine in Metro Manila, viz;
a. Sales
i. They were forced to stop operations starting March 17, 2020. They were only able
to back to operations on June 1, 2020.
ii. They have no revenues for March until the last week of April since the malls and
the stores that they were supplying were also closed.
iii. Last May, they started going online and was able to slowly sell few items. They
estimated their sales for May 2020 at around 30% of their last year’s in-house
sales.
iv. While they were able to resume operations last June 1, 2020, they were only able
to reach around 40% of their normal operations since their employees do not
have any way of going to work. In addition, the Department of Labor and
Employment has mandated to have around 50% of the employees in the office in
line with the social distancing measures.
v. They were only able to be on full operations when malls were opened at the latter
part of 2020.
b. Manpower
i. They currently have 80 employees where half are regular and half are contractual.
ii. While they were able to give the full months’ worth of their employee’s salary for
March and April, they needed to recalibrate their processes come May.
iii. Sadly, come May, they asked some of the regular and contractual employees to
be on a no-work, no-pay scheme so they could cut down on the costs.
 iv. In addition, they were able to regularly pay their clients starting September 1,
2021.

c. Collections/Disbursements
i. During the quarantine period, they asked for leeway from their suppliers on the
collection of receivables. Fortunately, they were given at least additional 60 days
of deferment on payments on top of their current credit terms.
ii. In addition, on their current warehouse, which they lease for P100K per month,
they were able to ask for a 90-day extension on rental payments.
iii. On the other hand, they also give their customers additional 60 days on top of
their usual credit terms.
iv. Fortunately, they were able to update all their back payables and back rental
payments.
18. Moving forward, these are their plans to recuperate from the loses last year:
a. They will keep their online platform for their retail trade.
b. Continue their in-store operations but on a limited capacity since they are implementing
health protocols.
c. Pipeline project with Waltermart for wholesale distributorship.
d. Possible purchase of a warehouse as they beef up their inventory.

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