Hafary Holdings 5VS - has announced the proposed acquisition of the remaining 19.0% issued share capital of subsidiary World Furnishing Hub (WFH) for $4.5 million.

 

On Jan 17, the company announced that its wholly-owned subsidiary had entered into a sale and purchase agreement with non-executive director and controlling shareholder Low See Ching for the purchase of the target shares.

 

According to Hafary 5VS - , the proposed acquisition represents an opportunity to increase its stake in WFH at a favourable price. WFH' s principal asset is the leasehold interest of the property located at 18 Sungei Kadut Street 2.

 

Based on the management accounts of WFH for the FY2023 ended Dec 31 and based on a valuation conducted on the property by independent valuer Orangetee Advisory, the market value of the property is $72 million, which ascribes a value of $4.76 million to the target shares.  

 

Upon completion of the sale, the company' s legal and beneficial ownership of the share capital of WFH will increase from 81.0% to 100.0%.

 

TILE specialist Hafary Holdings : 5VS +2.27% posted a profit net of tax of S$19.8 million for the second half of the financial year ended Dec 31, 2022, up 187.1 per year on year from S$6.9 million.

 

Revenue climbed up by 44.6 per cent to S$97.6 million, from S$67.5 million a year earlier.

 

In a business update on Friday (Feb 17), the mainboard-listed company noted that this was fuelled by revenue growth in both its general and project segments. 

 

Revenue in its general segment &ndash where customers include homeowners, architecture, interior design and renovation firms &ndash had risen by 40.3 per cent to S$62.6 million in H2, supported by the &ldquo active resale market&rdquo and &ldquo robust demand from homebuyers&rdquo .

 

In its project segment &ndash where customers include architecture firms, property developers and construction companies &ndash revenue also soared by 52.9 per cent to S$35 million, as construction activity resumed post-pandemic. 

 

For the full-year FY2022, profit net of tax increased 148.8 per cent year on year to S$30.6 million, while revenue rose 34 per cent year on year to S$168.9 million. This translated to an earnings per share increase to S$0.0682 for FY2022, from the previous year&rsquo s S$0.0269. 

 

Looking ahead, Hafary expects demand for residential and industrial building construction to remain at levels comparable to last year&rsquo s, underpinned by the development of new condominiums and high-specification industrial buildings. 

 

Still, the company noted that potential risks include growing inflationary pressures and rising interest rates that might crimp homebuyers&rsquo loan capacities. 

 

&ldquo The unfulfilled pent-up consumption demand may likely go towards overseas travel, rather than domestic spending,&rdquo it added. &ldquo Nevertheless, (we remain) committed to weathering the challenging business environment as market risks remain elevated and will also closely monitor its supply chain activities.&rdquo  

Mainboard-listed Hafary Holdings, which supplies premium tiles, as well as other fittings, has expanded its operations to include manufacturing capabilities on Dec 15.

 

The expansion was made through the incorporation of a new joint venture company (JVCo), International Ceramics Manufacturing Hub Sdn Bhd with Guangdong ITA Element Building Materials Co. Limited (ITA) and CNA Pte Ltd, an established premium tile manufacturer.

 

According to a release by Hafary, the new JV will enable the group to &ldquo move upstream&rdquo and overcome supply constraints. It will also leverage on its majority shareholder, Hap Seng Consolidated Berhad&rsquo s MML brand, as well as Hap Seng&rsquo s distribution networks to grow sales in Malaysia and the regional export market.

 

Through the JV, the group will lease two manufacturing plants in Johor, Malaysia, from Hap Seng Group.

 

CNA will also bring its years of experience (over 13 years operating manufacturing plants in China and over three years in Malaysia) into the JV.

 

&ldquo Coupled with ITA&rsquo s fine expertise in tile design patterns, Hafary is on track to become a key player in Southeast Asia&rsquo s ceramic industry,&rdquo reads the statement.

 

To further build on their core capabilities, Hafary has plans to invest approximately 40 million ringgit ($12.3 million) to ramp up the plants&rsquo production capacity from 16,000 sqm to 41,000 sqm per day.

 

In addition to helming Hap Seng Group&rsquo s ceramic business division, Hafary will also distribute the MML brand of ceramic tiles through its wholly-owned subsidiary Hafary Trading Sdn Bhd (HTSB) for retail, project as well as export markets.

 

The undertaking of the distribution will allow Hafary to have greater control over its supply chain and fully capture MML&rsquo s steadily growing demand. On this, Hafary will also be better equipped to take on larger project opportunities.