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Rennie Whang
Monday, Jun 23, 2014

Business

Carpet specialist rolls out plans for Catalist listing

The Straits Times | Rennie Whang | Monday, Jun 23, 2014

CEO Rena Ho says SMJ intends to use the IPO funds to expand in the region.

Carpet specialist SMJ International Holdings plans to list on the Singapore Exchange's Catalist board, with the aim of raising net proceeds of about $2.4 million.

The initial public offering (IPO) will value the company at $21.84 million.

The offer is by way of placement, with 20.24 million shares priced at 28 cents each.

Ms Rena Ho, chief executive officer of SMJ, told The Straits Times yesterday that the company intends to use the funds to expand in the region.

It sells its SMJ brand of carpets in more than 20 countries, through over 260 distributors.

Since 1992, it has been the authorised supplier for the Shaw Contract Group range of carpets here.

The brand is under Shaw Industries, a subsidiary of Berkshire Hathaway, whose founder is the legendary investor Warren Buffett.

"We want to grow sales in countries like Indonesia, Malaysia and Philippines. There are also emerging markets like Myanmar which we want to venture into," said Ms Ho.

Notable projects undertaken by the company include installing 503,776 sq ft of carpeting for the DBS Bank office at the Marina Bay Financial Centre in 2012, and 128,190 sq ft of carpeting for HSBC's office at HSBC Building in 2011.

Its main customers are property developers of commercial buildings, architects, designers and contractors.

One big risk factor is that the Shaw Contract brand alone accounted for 24.3 per cent of its total inventory sold last year.

There is no assurance Shaw Industries will continue to appoint SMJ as its authorised supplier.

"Still, we have been with them for more than 20 years and have a strong working relationship," said Ms Ho.

Another risk factor is that while SMJ's business requires it to keep a substantial and varied stock of carpets to meet customers' needs at short notice, its clients' tastes are hard to predict.

This could lead to a potential mismatch between its stock and market demand.

But Ms Ho said this issue is addressed by its sales and marketing team, which is in constant contact with its clients for feedback.

The 26-year-old company intends to distribute dividends of 30 per cent of its after-tax profit to shareholders for the 2014 and 2015 financial years.

Revenue for the company was $22 million last year, with $2.7 million net profit. Revenue was $23.6 million in 2012, with $2.4 million net profit.

Based on its earnings per share of 4.27 cents for the 2013 financial year, the IPO is priced at a historical price-earnings ratio of about 6.6 times.

The placement is expected to close at noon on June 25, and trading is expected to start on June 30.

wrennie@sph.com.sg


This article was first published on June 21, 2014.
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