Chin Hin buys 31.2% stake in Signature

by NUR HANANI AZMAN / pic by TMR

INTEGRATED builders conglomerate Chin Hin Group Bhd has acquired a 31.2% equity interest in Signature International Bhd for RM93.6 million cash to venture into the business-to-consumer (B2C) segment.

It entered into a conditional share sale agreement with shareholders of Signature, namely Tenyin Holding Sdn Bhd and Datuk Chooi Yoey Sun, to acquire 40 million ordinary shares or 15.6% equity interest each based on the purchase consideration of RM1.17 per share.

Post-acquisition, the shareholdings of Tenyin and Chooi in Signature will be reduced to 12.54% and 9.48% respectively. The acquisition will be funded via a combination of internal funds and bank borrowings.

Chin Hin group MD Chiau Haw Choon (picture) said the acquisition represents an opportunity for the company to expand its product range from building materials into quality kitchen, home and living solutions.

“The exercise will enable us to tap into the B2C segment as Signature’s products are not only supplied to property development projects but also directly to consumers through its many retail outlets located locally as well as overseas.

“It is also a significant milestone as the company ventures into a new segment which is home and living solutions,” he said in a statement yesterday.

As an integrated builders conglomerate that primarily serves other building and construction companies in Malaysia, Chin Hin views this as a strategic move to transition from a business-to-business model to B2C.

Signature is mainly involved in design, product development, manufacturing, marketing and distribution of kitchen systems, wardrobe systems, and built-in kitchen appliances. Signature also fabricates and manufactures glass, and aluminium products.

Its flagship brand, Signature Kitchen, is Malaysia’s largest kitchen cabinet and wardrobe manufacturer — holding the record of the largest kitchen renovation retail network in Malaysia with a substantial presence across 15 countries in both retail and corporate project segments.

Chiau said the company can also tap into the orderbook of Signature, which as at Dec 31, 2020, amounted to RM195 million for the kitchen and wardrobe system, and RM234 million for the glass and aluminium segment.

“Furthermore, Signature’s continuous efforts in expanding its global footprint shall provide its business with better earnings prospects. Currently, they are present in Thailand, Indonesia, Vietnam, Cambodia, Brunei, the Philippines, Maldives, Pakistan, United Arab Emirates, Sri Lanka, India and Singapore.

“Chin Hin will be able to transform into a total home solutions provider and leverage such over- seas networks for future expansion abroad,” added Chiau.

In addition, Chin Hin will also be able to consolidate the financial results of Signature, which is expected to increase the profitability and strengthen the financial position of the group.

Chin Hin’s share price has climbed 26% or 36 sen for the six- month period ended Dec 31, 2020, from RM1.38. It ended five sen or 2.79% lower at RM1.74 yesterday, valuing the company at RM968.12 million.

Meanwhile, Signature shares were also down 15 sen or 13.18% at RM0.96, bringing it a market capitalisation of RM250.9 million.

For the fourth quarter, Chin Hin recorded a net profit of RM8.25 million, 630% increase compared to RM1.13 million recorded in the same quarter of 2019.

The group posted a revenue of RM311.26 million compared to RM280.57 million, an increase of RM24.26 million or 8.45% due to the construction site progress started to catch up after suspension of works during the Movement Control Order (MCO) and Conditional MCO.

“The increase in demand for autoclaved aerated concrete block, wall panel, wire mesh, drymix products, precast concrete and MI polymer pipes in the current quarter has enabled the plants to reap economies of scale as a result of operational efficiency.

“Hence the group is seen on track for earnings recovery,” Chin Hin said in bourse filing recently