Building material maker Chin Hin buys 31.2% stake in Signature International for RM93.6m

KUALA LUMPUR (March 8): Building material maker Chin Hin Group Bhd has acquired a 31.2% stake in kitchen cabinet manufacturer Signature International Bhd for RM93.6 million cash or RM1.17 per share.

Chin Hin group managing director Chiau Haw Choon said the acquisition is in line with its objective of acquiring strategic stakes in companies with potential for future growth.

"The acquisition represents an opportunity for the group to expand its product range from building materials into quality kitchen, home and living solutions. Signature’s products are not only supplied to property development projects but also directly to consumers through its various retail outlets, which will enable the group to tap into the business-to-consumer segment," he said in a statement today.

"Synergistic benefits are expected to arise from the acquisition as both Chin Hin and Signature are operating in and servicing the same industry, that is, the construction and property development industry," he added.

In a bourse filing, Chin Hin said it today entered into a conditional share sale agreement with two major shareholders of Signature, namely Tenyin Holding Sdn Bhd and Signature executive director and major shareholder Datuk Chooi Yoey Sun, to acquire a 15.6% equity interest each under the acquisition. The purchase consideration of RM1.17 per sale share represents an 18% premium to the five-day volume weighted average market price of Signature shares of 99.18 sen.  

Post acquisition, the shareholdings of Tenyin and Chooi in Signature will be reduced to 12.54% and 9.48% respectively.

Chin Hin said the acquisition will be funded via a combination of internal funds and bank borrowings.

Signature recorded a decline in revenue and profit for the financial year ended June 30, 2020 (FY20), mainly due to the impact of the Covid-19 pandemic on its operations. Revenue from the kitchen and wardrobe segment decreased as the progress of all projects halted during the movement control order (MCO) and the conditional MCO (CMCO) period in 2020.

However, for the six-month period ended Dec 31, 2020 (1HFY21), Signature recorded an increase in revenue and pre-tax profit on higher project revenue from its glass and aluminium product segment and improved project margins from the kitchen and wardrobe system segment.

"Upon completion of the acquisition, the group will be able to equity account the financial results of Signature, which is expected to increase the profitability and strengthen the financial position of the group," said Chin Hin.

As at Dec 31, 2020, Signature's order book totalled RM195 million for the kitchen and wardrobe system, and RM234 million for the glass and aluminium segment.

With the acquisition, Chiau has been appointed an executive director of Signature, effective immediately.

At the noon break today, shares in Chin Hin settled 17 sen or 9.5% higher at RM1.96, valuing the group at RM1.09 billion. Meanwhile, Signature shares were also up four sen or 3.64% at RM1.14, bringing it a market capitalisation of RM299.51 million.

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