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lsk aims to double sales by 2020 with mfo in its stable

by:Qihao      2019-08-31
Petaling jaya: as a manufacturer of natural latex bedding, Lee Swee Kiat Group Bhd (LSK)
With the first stage of growth, it is planned to acquire the Mattress Factory (MFO).
According to Datuk Eric Lee, general manager of LSK, the group\'s goal is to double sales by 2020.
LSK achieved sales of RM75mil in the fiscal year ended December 31, 2017 (FY17).
Lee told StarBiz that the group\'s goal is to increase sales to yuan by 2020.
\"This will go through two-
Both domestic sales and export.
After the recent cancellation of the GST (GST)
\"We expect this to drive consumer spending, which in turn will significantly increase our domestic sales this year,\" he said . \" He added that the group is focused on the ASEAN market and has a vision to become a leading latex manufacturer in the region.
It is estimated that LSK exports 55% of its products.
LSK is a niche market for bedding, focusing on 100% natural latex mattresses.
Production of 100% of natural latex mattresses requires high technical expertise, Lee said.
At present, there are Malaysia, Thailand, Sri Lanka and Vietnam who can master the production of natural latex products, and these countries can obtain raw materials because freshness is a determinant of latex quality.
Bedding accounts for more than 95% of the group\'s total turnover, sold under the brands Napure, Englander and Tempur.
LSK is the exclusive distributor of Tempur, while the Englander trademark in the ASEAN region was acquired in 2015 for $1. 25mil.
In addition, LSK also produces half
It is mainly sold to finished products such as latex foam in the export market.
The group also has 8 international brand chain galleries (IBG)outlets.
LSK built two factories in baliwa-
It covers an area of 300,000 square feet and has 6 production lines.
The group produces 6,000 tons of latex foam per year.
Mr. Lee said the group\'s operations had previously been heavily dependent on foreign workers.
However, the group is working to increase the automation of its business.
\"We are in talks with several political parties, some of which are the world\'s top automation companies, and are exploring robotic arms.
\"We have two years to improve our system to adopt industry 4.
We cater to our expansion plan beyond 2020.
\"It\'s more challenging to adopt a higher level of automation because our products are bulky and the production line is not as simple as glove production,\" he said . \".
LSK registered net profit is rm6.
Fiscal Year 03, compared with the previous fiscal year, an increase of 15%.
Net cash of the group is 8 yuan. 15mil.
The price of the stock is-
Multiple of income of 24.
67 times, the market value is 146mil.
Last month, LSK adopted a dividend payment policy, with a consolidated net profit of not less than 30% from fiscal 17, in the form of cash or stock dividends.
Although bedding is considered furniture, LSK\'s business differs from furniture manufacturers such as latitude tree Holdings Bhd, livid Industries Bhd and Poh Huat Resources Holdings Bhd.
This is because furniture manufacturers produce wood.
Furniture with Wood as the main raw material.
The main ingredient of LSK products is natural latex, accounting for about 55% of the total cost of LSK. Most wood-
Furniture manufacturers export or sell products to dealers.
As for LSK, in addition to dealers such as Harvey Norman, the group also has its own direct sales channels through its IBG store.
At present, local enterprises to consumers (B2C)
Sales accounted for 60% to 70% of LSK\'s total sales.
With direct access to end users, LSK is able to control its brand, marketing and improve cash flow.
CIMB Research said in a launch report that the recent decline in natural latex prices is a boon for LSK.
\"While LSK does pass cost savings to customers by lowering the selling price, we believe it can benefit from the time difference in adjusting the selling price, based on volatility, this could change between one and six months.
\"At present, we assume that the price of natural latex is RMB 5.
FY18 to fy20 25 kilograms per kilogram.
\"According to our estimates, for every 5% decrease in latex prices, FY18 for LSK will increase to FY20 per share (EPS)by 3. 7% to 4. 5%.
\"This is the assumption that LSK will not save any cost because of the decline in raw material prices,\" CIMB Research said . \".
According to Lee, LSK competes equally in the market because the industry it operates in is not a recipient of government subsidies.
\"Brand and efficiency are very important and we always try to compare the Company with the latex gloves industry,\" he said . \".
Socket concept for major markets-
After proposing the acquisition of five outlets and retail trademarks for mattress factory direct sales, listed companies are entering the retail field of direct sales concept (MFO)
The total cash consideration is rm2. 78mil.
Taking into account the value of the rm1 showroom accessories, the acquisition is based on the willing buyer and the willing seller to negotiate.
53 mil and trademark value rm1. 25mil. MFO is a 23-year-
Old trademarks in bedding marketing and distribution
Consumer income.
According to a document submitted by Bursa Malaysia, LSK will acquire goodwill, assets and commercial intellectual property rights of MFO Sdn Bhd.
Unless there is any unforeseen situation, the acquisition is expected to be completed within two weeks.
MFO store is different from LSK\'s self-operated store
The IBG store as an IBG store is a boutique, while the MFO store is a store concept store with a chain of IBG stores.
Lee explained that the IBG store sells LSK\'s own brand in the range of product prices from RM3 000 to RM8 000, targeting high-income customers.
On the other hand, MFO\'s stores also have MFO\'s brand Dorma and the third brand Dorma.
Party brands such as Kingkoil, good night, dream.
Competitive price range \"in the future, we plan to design RM1, 000 to RM4, 000 bedding under our own brand Napure and Englander, which will be sold at MFO stores, \"said Li.
In 2017, the accumulated income of the five MFO outlets was RM10mil and the net profit was RM1mil.
According to these figures, Lee expects MFO to contribute at least 1 million to 2 million yuan in net profit to LSK each year.
Li said the proposed acquisition is in line with the group\'s strategy to expand the B2C segment and increase retail sales.
\"By doing so, we can bring our products directly to our customers, thus providing greater value and more competitive prices.
\"This is perfect for us because we didn\'t supply our products to this supply chain before.
\"Therefore, we will increase the intensity of advertising and promotion (A&P)
\"There are more activities in the B2C field, especially in marketing,\" he said . \".
The average allocation of A & P activities is RM1mil per year.
Li added that the organization is still working to ensure a strong electronic
Enter e-commerce partnercommerce space.
According to a report from CIMB Research, the proposed acquisition may increase LSK\'s expected earnings per share for the fiscal year 2018-2020 by 8. 3% to 16. 6%.
\"This is assuming the sales contribution of the five MFO outlets, without taking into account the profit increase that LSK\'s own-brand products bring to these outlets across sectors.
\"LSK does not offer any products to MFO outlets,\" CIMB Research said . \".
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