Signature eyes regional expansion with RM160 mil acquisitions
03 Nov 2022
Signature International Bhd has claimed that it is set to become Asean’s largest kitchen and wardrobe company via acquisitions of Singapore-based Corten Interior Solutions Pte Ltd and Areal Interior Solutions Pte Ltd for S$47.8 million (RM160.48 million) cash.
In a Bursa Malaysia filing on Thursday (Nov 3), the kitchen and wardrobe manufacturer said it has entered into agreements with shareholders of Corten and Areal respectively, for the purchases.
Signature said that under the conditional share sale agreement with Corten shareholder Bernard Lim Leng Foo, the company is to acquire 1.5 million shares or 75% equity interest in Corten for RM151.08 million.
Meanwhile, Signature also struck a deal with Lim and Chua Wei Ping to acquire the entire equity interest in Areal or one million shares for RM9.4 million.
“The acquisitions will be funded via a combination of internally generated funds and bank borrowings, and are expected to be completed by the first half of 2023,” the company in a statement.
Corten is principally involved in the design, manufacture and distribution of kitchen and wardrobe systems and interior fit-out, while Areal is involved in the fabrication and finishing of stone and metal products such as, among others, kitchen countertop, basin, bath vanity, and wall cladding.
Signature managing director Chiau Haw Choon said the proposed acquisitions are in line with the company’s objective of acquiring strategic stakes in profitable companies within the industry to secure strong and sustainable growth domestically and internationally.
“Corten, Singapore’s largest kitchen and wardrobe company with more than 50% market share of private residential property projects, is a perfect fit with Signature’s kitchen cabinet and whole house customisation business,” he added.
Chiau noted that the company is upbeat about its prospects as the consolidation of Corten and Areal’s equity interests will increase Signature’s profitability and strengthen its financial position.
“There is clear profit visibility as there was no less than S$200 million in Corten’s order book as of end-October 2022. This order book will keep the company busy for the next three years, from 2023 to 2026.
“In addition, Corten guarantees a profit after tax of no less than S$10 million for the financial year ending Feb 28, 2023 (FY23),” he added.
The company noted that the acquisitions are subject to its shareholders’ approval at an extraordinary general meeting to be convened.
According to Signature, Corten’s profit after tax for FY22 stood at RM25.1 million, higher than FY21’s RM16.39 million and FY20’s RM7.15 million. Revenue also grew to RM172.04 million in FY22, up from RM139.55 million in FY21 and RM151.51 million in FY20.
As for Areal, it posted a loss after tax of RM595,000 for FY22, compared with RM1.64 million in FY21 and RM219,000 in FY20. The company reported a revenue of RM14.39 million for FY22 and RM3.14 million for FY21.
“There was no revenue recorded by Areal during FY20 as Areal only commenced its business operations in May 2020,” Signature noted.
Shares in Signature closed eight sen or 3.48% higher at RM2.38 on Thursday, giving the company a market capitalisation of RM702.69 million.
Source: The Edge Markets