"Thursday January 28, 2010
Homeritz to build more plants
KUALA LUMPUR: Homeritz Corp Bhd, which designs and makes upholstered home furniture, will invest RM9.12mil to set up manufacturing facilities in Muar, Johor and Vietnam to boost production capacity.
Executive director Tee Hwee Ing said the company would spend RM3.4mil and RM5.72mil for the plants in Vietnam and Muar respectively.(“We will spend RM5.7mil to set up a new plant to replace our rented facility while in Vietnam, we will invest RM3.4mil in a plant which will be operational by April,” Tee said.)
“We are in advanced negotiations to lease two factory buildings with a built-up area of about 52,000 sq ft in Binh Duong Province, Vietnam,” she said at the launch of the company’s prospectus in conjunction with its listing on the Bursa Malaysia main market on Feb 19.
Tee said Homeritz hoped to obtain all the necessary regulatory approvals and commence operations in the second half of this year.
These factories are expected to produce 24,000 sofa sets per annum."
Tee said the investment cost of RM3.4mil included the purchase of machinery and equipment and would be financed via internally-generated funds and/or borrowings.
On its expansion in Muar, she said it would be financed entirely from the proceeds of its initial public offering (IPO).
“The Muar plant is expected to be completed in two years. Once completed, production capacity is expected to increase by a further 15%,” she said.
Homeritz currently has four factories in Muar, of which three are its own and one rented.
Tee said Homeritz’s factories were now only running at 70% utilisation but the company was expanding output capacity to tap the anticipated growth in the upholstered furniture industry.
“We believe the upholstered furniture industry will continue to expand due to an increasingly larger home owner base in our target markets,” she said. The company has customers in over 40 countries, including Australia, New Zealand and the United States.
Founded in 1997, Homeritz primarily undertakes original design manufacturing and original equipment manufacturing activities.
It derived 86% of its sales from its in-house product designs in 2009. It has also created its own brand of lifestyle furniture series under Eritz.
Homeritz’s IPO involves the issuance of 9 million new ordinary shares and offer for sale of 35.02 million vendor shares at 65 sen apiece.
Of the nine million new shares, eight million would be offered to the public and one million allocated to eligible directors, employees and business associates, Tee said.
Prior to the listing, the group had undertaken a rights issue of 10.1 million shares at par for its existing shareholders. Both the rights and public issues will raise some RM7.87mil in proceeds.
MIMB Investment Bank Bhd, a member of EON Bank group, is the adviser for Homeritz’s listing exercise.
