Heliconia-backed Rigel Technology eyes expansion, dismisses listing talk

RECENT market talk of Rigel Technology planning an initial public offering is just speculation, said Christopher Ng, chief executive of the Heliconia Capital-backed bathroom products maker.

The homegrown company had been thought to be exploring a listing on the Singapore Exchange last year, but plans did not go ahead.

Speaking to The Business Times at Rigel's headquarters in Changi, Mr Ng dismissed the talk as simply "a rumour".

He conceded that Rigel "will list when the time is appropriate", but said the group is in no hurry to do so.

Firstly, Temasek unit Heliconia, which took a "significant" minority stake in Rigel in 2014, is not in a rush to list the group. "I think Heliconia is very happy with us and they know that their investment is in good hands," Mr Ng said.

Heliconia appears to be the second-largest shareholder in Rigel after Mr Ng, who founded the company in 1991, according to regulatory filings. The investment firm holds a roughly 20.5 per cent stake (through a company it controls), while Mr Ng has a close to 64 per cent interest.

Mr Ng also noted that Rigel is financially healthy and has no lack of funding. "I think liquidity-wise, we're pretty healthy. We don't have a lot of obligations and... don't have very high gearing. And we have no shortage of funds to draw from the market."

The only consideration for listing, he said, would be to improve Rigel's branding and profile. This would help the company attract even better talent, and drive "meritocracy" within it.

For now, Rigel is mainly focused on overseas expansion and the launch of new products so as to hit its growth target - nothing less than a 30 per cent yearly increase in revenue going forward.

Since 2014, Rigel's annual revenue has overall been on an upward trend. It recorded S$41.6 million in revenue for 2018, up 22.8 per cent from 2017.

Profit after tax, however, has seen declines. In 2017, profit sank to S$609,000 from S$4.7 million in 2016. And for 2018, it posted a post-tax loss of S$103,000.

Mr Ng attributed it to financing the Changi office, which cost S$35 million to build and officially opened in 2016.

The loss for 2018 was due to a financial adjustment in how Heliconia's shares were recorded, he said. Rigel would otherwise have been in the black.

To support the growth offensive now, the group has improved its team and production in the past few years, spending a sum of tens of millions in the process.

"It gives us a better position than in the past to make sure in future, we will really scale up," Mr Ng said.

To train staff, for instance, it has made use of LinkedIn Learning, an online learning platform offering courses in software, creative and business skills. Rigel employs more than 300 people globally, with over 100 staff based in Singapore.

Also, it increased the size of its research and development (R&D) team, based in the Changi office, by almost 40 per cent. For comparison, there were 13 engineers working on R&D and test manufacturing in 2016.

On production, the group has introduced new equipment and automation in its two manufacturing plants in Luzhou and Ningbo, China. It includes a robot to glaze ceramic, and high-pressure casting equipment, which improves the precision of moulding.

This year, Rigel - which has an annual R&D budget of up to 5 per cent of revenue - will be pushing out a series of new products completed last year.

Among the items on offer is a urinal that's specially shaped to reduce the amount of water needed to flush it.

There's also a polymer flush valve that will not corrode or rust when seawater is used instead of fresh water to flush toilets, making it particularly suited for markets such as Hong Kong.

"Some of these are targeted at new markets, and I think it will have some big impact on our revenue," Mr Ng said.

The Hong Kong-Macau market is among those Rigel has set its sights on expanding its presence this year.

The group spent 2019 cultivating a distributor partnership in the market which, it believes, bears plenty of similarities to Singapore, being mature and well-commercialised. "We believe we can just replicate our model there," said Mr Ng.

And he's confident that the group will bear the fruits of its confidence in the market in the years to come, even as Hong Kong continues to be rocked by protests, which have gone on for more than seven months.

"Well, we look at it in the long term. The protests, I think, we believe are in the short term. Hong Kong-Macau is an important market to China, they will not let it off. So, the prospects are still there," he said.

Rigel also wants to expand further in Indonesia and China. It already has offices there, but those two large markets still have much growth to offer.

Yet, each market still poses challenges. For example, Indonesia is "not so straightforward" due to its different culture and protectionism, said Mr Ng.

In China, where Rigel has been doing business with foreign property developers, it now wants to clinch projects with local Chinese developers too. That means having to understand their internal processes and procurement methods, for instance.

In hopes of getting professional guidance on its overseas forays, Rigel last year joined Scale-up SG, a 2½-year programme that aims to help high-growth companies scale and expand abroad.

Launched by Enterprise Singapore, Scale-up SG provides the companies access to partners like McKinsey & Company and PwC Singapore.

With the consultants, Mr Ng said he thinks the group "can do it more confidently and more properly".

Aside from Indonesia and China, Rigel also has offices in Vietnam and Malaysia. Its products are distributed to countries in South-east Asia and South Asia, as well as Chile and Rwanda.