Malaysian bedroom furniture maker plans Catalist IPO

MALAYSIAN bedroom furniture exporter LY Corp is planning an initial public offering (IPO) on the Catalist board, which will be done through a placement of new shares and vendor shares.

LY Corp designs and manufactures wooden bedroom furniture that is typically rebranded by overseas dealers for sale outside Malaysia. It is controlled by Lian Yu Holdings. The business was founded in Johor in 1976.

LY Corp is raising funds to expand its sales network in China, upgrade machinery and equipment, as well as acquire new premises near the 15 factories and warehouses it owns or leases.

It is building a hostel for its foreign workers, which is expected to be completed by the first quarter of 2018.

The company will also explore investments, mergers and acquisitions, as well as joint ventures, it said in a draft prospectus lodged on Dec 26).

Net profit in the six months to June 30 rose 21.6 per cent to RM21.6 million (S$7 million) on a 17.2 per cent jump in revenue to RM166 million. This was on the back of higher sales volumes as well as an increase in average selling price due to discounts given to customers in the same period a year earlier, as well as the strengthening of the US dollar against the Malaysian ringgit.

Around 80 per cent of the group's revenue is derived from customers based in the United States.

The size of the IPO has not been announced, but LY Corp said that it expects profitability in 2018 to be hit by a jump in administrative expenses, including one-off listing expenses.

UOB Kay Hian is the sponsor and placement agent.

In 2016, Malaysia exported US$1.1 billion worth of wooden home furniture, including US$669 million of wooden bedroom furniture. LY Furniture, the group's subsidiary, exported RM249 million worth of wooden bedroom furniture in the same year.