Singapore Corporate News - 31 Jul 2007

Travelite buys YGM Marketing for $14.2m

TRAVELITE Holdings, which was listed on Sesdaq in May this year, is acquiring local menswear distributor, YGM Marketing, for $14.2 million.

The acquisition is subject to, among other things, the approval of shareholders and the in-principle approval of the Singapore Exchange.

Travelite, which markets, sells and distributes travel and lifestyle merchandise, is making the acquisition as part of its plans to increase its current product range and regional reach. YGM, which is described as a leading regional menswear company, has several manufacturing and distribution licences for international brands such as Arnold Palmer, Ashworth, Pierre Cardin and Van Heusen.

About three quarters of Travelite's revenue in FY2006 came from overseas markets such as Malaysia. As a majority of YGM's revenue came from the Singapore market, the proposed acquisition is expected to strengthen Travelite's local presence.

'We are constantly on the lookout for possible opportunities to further strengthen our business, either through acquisitions or strategic mergers,' said TJ Thang, executive chairman of Travelite.

YGM, which has over 40 years of experience in the menswear industry, has long-standing partnerships with many leading departmental stores such as Metro, Robinsons, OG, Takashimaya and Tangs. As at March31, YGM has more than $3 million in cash and equivalents. It also has zero borrowings, said Travelite.

The acquisition of YGM will be financed through a cash payment of about $11.2 million and the issue of 6.98 million new Travelite shares at 43 cents each.

YGM has provided a profit guarantee of at least $1.3 million in pre-tax profits for the financial year ending March31, 2008. If it fails to meet the target, it will have to pay Travelite the shortfall.

'We look forward to the completion of the proposed acquisition soon so that the group can harness the synergistic benefits from this strategic acquisition, which will translate into greater value for all our shareholders,' said Mr Thang.

Travelite shares, which were issued at 30 cents each at the IPO stage, last closed at 59.5 cents.

Making waves offshore; now courted at home

LAST week, there were various reports in the international media citing the near completion of the world's tallest building, Burj Dubai. But there was one little piece of information that has not been reported.

And this is the fact that a little-noticed Singapore company, Design Studio Furniture Manufacturer, has clinched a $9.43 million deal to supply and install kitchen systems to the 899 luxury apartments at the 160-plus-storey project in Dubai.

Mainboard-listed Design Studio is a premier interior fitting-out specialist for high-end condominiums, with a business primarily focused on the supply and installation of all built-in furniture and fittings for these units.

Set up in 1992 as a sofa maker by its founders, Bernard Lim and Jeremy Koh, the company started making inroads into private residential projects in the mid-1990s by supplying and installing panelling products like doors and frames, kitchen and wardrobe systems, as well as bathroom vanity cabinets.

It listed on the main board of the Singapore Exchange in early 2003.

Since then, Design Studio has been quietly but steadily building up a strategic global presence in key markets around the world where there has been a growing demand for niche quality panelling furniture and project management expertise.

For example, some 60 per cent of its $60 million revenue last year was from offshore projects in the United States, Middle East, Japan, Malaysia and elsewhere.

Burj Dubai is just one of over a dozen such projects.

In Dubai itself, it has several other projects, including the supply and fitting-out contract for the rooms and suites at the Intercontinental and Crowne Plaza hotels.

Over in the US, it is engaged in building and installing the deluxe furniture at Donald Trump's 1,281-unit condo-hotel, the Trump International Hotel & Tower, in Las Vegas.

Meanwhile, the Singapore company has also been wrapping up work for the US$1.5 billion Cosmopolitan Resort & Casino, a condo hotel sitting on the Las Vegas Strip between the Bellagio and MGM Mirage's planned US$7 billion urban complex, City Centre. It has also clinched contracts for the hotel and apartments as well as a 61-storey resort casino with 3,438 rooms and 564 suites designed by renowned Pelli Clarke Pelli Architects.

As the saying goes, it is hard to keep a good company down, and Design Studio's impressive offshore track record has started paying dividends at home.

With the property market here going into overdrive during the past eight to 10 months, the company has found itself courted by an increasing number of developers of exclusive condos in prime districts of Singapore.

These projects include Sky @ Eleven, The Sail @ Marina, Ocean Front Condo on Sentosa, Ardmore II and St Regis Residences. It has also been contracted to fit out the rooms of the exclusive Sentosa boutique hotel, The Capella.

And more projects are likely to be announced during the coming months.

For the year ended December 2006, Design Studio enjoyed a 56per cent rise in turnover to some $60 million. Gross profit surged four-fold to $11 million, while net profit was $5.6 million (which was a sharp recovery from the previous year's loss of $2.95 million).

As at April 2007, the company had an order book of some $106 million. One does not need to be a genius to figure out that this order book could be significantly fatter now.

The company is likely to disclose the precise numbers when it unveils its first-half earnings in a few weeks' time.

Meanwhile, the smart money would be on Design Studios unveiling a strong set of interim numbers, and possibly providing very positive guidance for the rest of the year, as it continues to leverage on a booming high-end property market here at home, even as it continues to reel in more projects in the US, the Middle East and elsewhere.