Ni Hsin Resources Bhd, which makes stainless steel kitchenware under the Buffalo brand, expects net profit this year to jump by 10.7% from RM7.5mil last year to RM8.3mil, boosted by a new product to be launched next month.
Managing director Hsiao Chih Jen said the company expected to make between RM15mil and RM20mil sales from a new stainless steel cookware, a product of its in-house research and development team.
“We intend to design new types of cookware and kitchenware to meet the different consumer needs in the Asian and Western markets,” Hsiao told StarBiz in an interview.
Operating from a factory in Seri Kembangan, Selangor, Ni Hsin derives some 95% of sales from exports to countries like Japan, Taiwan, Hong Kong, Europe, South Korea and the US, with Japan being its biggest market contributing 48% and 11% from Taiwan.
“We will continue to explore new export markets such as Australia, Thailand, the Philippines and Indonesia,” he said.
Ni Hsin would be tapping the Philippine and Indonesian markets as soon as the company was currently finalising some negotiations.
The company hopes its exports to Europe will increase to 15% from the current 4% in two years.
Hsiao said the company was now negotiating with a company in Europe for a possible partnership.
Ni Hsin is a major player in the high-end stainless steel cookware segment in Malaysia, thus giving the company almost total control of the local market.
In Malaysia, Ni Hsin’s products accounted for over 74% of the country's cookware exports last year.
“Our cookware revenue is subject to seasonal cycles ,” Hsiao said.
He said the demand for its premium cookware and kitchenware generally increased in the second half of the year mainly due to the “seasonal” consumer spending behaviour in our export markets, when the shopping seasons normally peak during festive periods such as Christmas and the New Year.
Cookware sales in the second half of the year accounted for about 62% of total revenue for financial year ended Dec 31, 2004.
“We mitigate revenue fluctuation by diversifying our product offerings with the setting up of the convex mirror division, where revenue will not be affected by seasonal changes.
“This will, to a certain extent, cushion the impact of the seasonal cycles on our revenue in the cookware divisions,” he said.
Hsiao said the group was not overly dependent on sales of the Buffalo range as this only accounted for about 27% of its revenue last year.
Besides the Buffalo range of products, the company is also an original design manufacturer (ODM) for stainless steel cookware.
At present, ODM accounts for 75% of the company's sales, while the balance is contributed by its in-house brand.
Ni Hsin plans to increase its in-house brand contribution to 50% in five years.
“Society has become more affluent and does not mind paying the high price for high-end cookware as long as it can deliver good quality cooking.
“The current trend of healthy cooking should augur well for the high-end stainless steel cookware industry as itis well-known for preserving the original flavours and nutrients of the food during cooking,” Hsia said.
He added that the growing popularity of induction cooking was expected to be hugely beneficial to the group in providing high quality magnetic multi-ply stainless steel cookware suitable for this cooking method.
Hsia said, in future, the group would invest in this segment because of its cost efficiency, safety features and user-friendliness.
The company is en route to a listing on the second board of Bursa Malaysia on July 28.
Under the initial public offer, Ni Hsin is offering 22.5 million 20 sen shares each at an issue price of 33 sen per share, of which 15 million shares are for sale to the public, 7.5 million for eligible directors and employees.
The exercise will raise RM7.4mil, from which RM3.6mil is for capital expenditure, RM2.3mil for working capital and RM1.5mil for listing expenses.