Wednesday April 18, 2007

Ogawa opens 40% higher at RM1.40

Ogawa World Bhd made its debut on the Main Board on April 18 at RM1.40, or 40 sen above its offer price of RM1 each.

At the opening bell, there were 2.42 million shares done. Within the first half-hour, there were 13.16 million shares transacted at prices ranging from RM1.29 to RM1.40.

Its public offer of six million shares of 50 sen each at RM1 apiece was oversubscribed 33.42 times.

The homegrown retailer of health and wellness equipment raised about RM31.9 million in gross proceeds from the listing exercise.

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Source: The Edge Daily

Wednesday April 18, 2007

Malaysia's Ogawa plans aggressive overseas expansion after strong market debut

KUALA LUMPUR, Malaysia: Malaysian health equipment maker Ogawa World unveiled plans to expand aggressively in the Mideast and Asian region after making a strong debut Wednesday on the local stock market.

Ogawa hit a high of 1.40 ringgit (US$0.4, €0.33) at the opening bell, before easing to close at 1.23 ringgit (US$0.35, €0.3), up 23 percent from its initial price offer of 1 ringgit (US$0.29, €0.24).

Its executive director Louis Chong was quoted as saying national news agency Bernama that Ogawa aims to double revenue from export sales to 40 percent in the next three years, from 21 percent now.

The company currently has 149 outlets, 85 of which are based abroad.

Ogawa, which already has 30 outlets in China and 15 in Vietnam, will open another 11 branches in the two countries, Chong said in the report.

It will also launch its first outlet in Dubai by year-end and is exploring franchise opportunities and sole distributorships in either Chennai or Bombay in India, and Bangkok in Thailand, he added.

Chong and other Ogawa officials could not be reached for comments.

Ogawa designs, makes and distributes health care equipment such as relaxation and massage chairs, slimming belts, foot massagers, threadmill and cardio equipment.

In a recent report, Kenanga Research said Ogawa controls about 45 percent of the Malaysian market that is estimated to be worth over 300 million ringgit (US$85.7 million, €71.4 million) in 2006.

However, it said Ogawa faces stiff competition from Singapore-based retailer OSIM and other players and imitation products present a growing threat to its business.

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Source: The Associated Press, International Herald Tribune

Saturday April 14, 2007

Ogawa World aims for double-digit growth

By DARSHINI M. NATHAN

A GROWING middle class, rising disposable incomes and increasingly sophisticated lifestyles, which emphasise health and exercise, are just some of the factors that have contributed to Ogawa World Bhd's growth in the domestic market in recent years. 

That these aforementioned trends are gaining importance in other markets around the region is spurring the health and wellness equipment retailer to replicate its success abroad. 

The group, scheduled to list on Bursa Malaysia's main board next month, has now charted a growth path that mainly involves looking for opportunities in high growth markets like Thailand, India and the Middle East and expanding its footprint in countries like China and Vietnam. The group is also looking at franchising opportunities in Europe and Pakistan. 

"We are hoping to achieve double-digit growth over the next few years. To accomplish that, we will open more stores, introduce new products and expand overseas," says Ogawa World executive director Louis Chong. 

Chong: The group hopes to grow its exports so that it makes up 25% of group revenue

The group is targeting to grow its exports sales so that it accounts for 40% of group revenue within the next three years, from 21% in financial year (FY) ended June 2006. For FY07, Chong says the group hopes to grow its exports so that it makes up 25% of group revenue.  

At the moment, he says China and Vietnam are showing the most potential. It has been 18 months since Ogawa World set up shop in China but sales in that market already account for one-tenth of group revenue.  

Likewise, its operations in Vietnam kicked off just last year but the Ogawa brand has already achieved international brand status. 

Thus it is not surprising that the group’s overseas store expansion plan will be focused mostly on these two markets. Ogawa World intends to set aside RM5.5mil of the listing proceeds to expand overseas and locally. 

At present, it has 108 retail outlets in Malaysia, Singapore, China and Hong Kong. Appointed sole distributors in Indonesia, Australia and Vietnam operate another 33 outlets. 

Ogawa, which started out in the healthcare equipment market selling foot massagers, has seen its product range grow over the years so that it now has 29 products that are grouped under five categories: relaxation, therapeutic, fitness, diagnostic and hygiene products. 

But its best-selling product thus far is the massage chair, which was introduced in 2000. It now accounts for close to 70% of group revenue.  

The retail price of the massage chairs ranges from RM3,000 to RM21,000.  

Even overseas, the product has proven to be the most popular in Ogawa’s portfolio of offerings.  

Clear market leader 

Aggressive advertising and promotion activities over the years as well as a strong emphasis on product design and development has propelled Ogawa to the number one spot in the domestic healthcare equipment market. 

The company’s origins can be traced back to 1986 when its founders started trading household and electrical products such as water purifiers as well as kitchen and cooking appliances. In 1996, the company ventured into the health and wellness equipment business. 

Ogawa World now controls about 45% of the domestic market that is said to be worth over RM300mil currently. That value is expected to more than double in five years’ time. (Its closest competitor is Singapore’s Osim International, which commands just over 32% of the market.) 

To maintain its lead locally, Ogawa World has come up with a few strategies to make its products accessible and affordable to a wider segment of the population.  

It has tied up with banks and credit card companies to provide flexible payment schemes. It is also ramping up efforts to promote its affordable range under the brand name Deki. 

The group will widen Deki's product range and increase the number of outlets distributing the range to 12 outlets this year, from five outlets currently. 

Chong says the group is considering offering Deki's range of products in overseas markets in a few years to come.  

Ogawa World takes pride in the fact that it is the only local player that undertakes product design and development. Yet, it does not manufacture its own products. By outsourcing this function to original equipment manufacturers in China, Taiwan, Japan and South Korea the group is able to focus on other value-added functions such as product design and development and after-sale service. 

In fact, the group has allocated RM3.8mil from the listing’s total proceeds to boost its product design and development capabilities. 

Copycats on the rise 

Competition in the market though has increased in recent years not least of all because of the proliferation of copycat products.  

In fact, Hwang-DBS Research points out that Osim International saw sales from the North Asia segment fall in the second half of 2006 because of competition from imitation products. 

"While it can be argued that product reliability/quality and market acceptance arising from brand building activities can mitigate this risk, the emergence of copycat products at competitive prices will likely pose a key threat to the growth potential of mainstream healthcare equipment retailers like Ogawa World," the house says. 

From Ogawa World’s standpoint, competition is just part and parcel of the business.  

Says Chong: "Competition is not something new for us. Besides, customers tend to be more cautious when purchasing health and wellness equipment because there is the fear that imitations could pose a risk to their health. Imitation products have been around for some time but our brand management activities have made customers more aware about Ogawa products." 

He says the company has also invested in its after-sales service. "We offer a two-year warranty for our products and customers have the assurance that the company will be around in the event they require after-sales service." 

Ogawa World expects to raise total gross proceeds of about RM32mil from the rights issue and public issue of 17.2 million 50 sen shares, of which six million shares will be made available to the public. In addition, the group will make an offer for sale of 36 million shares to approved bumiputra investors.  

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© 1995-2005 Star Publications (Malaysia) Bhd (Co No 10894-D)

Saturday March 31, 2007

The great growth potential

Vietnam is fast becoming the new China with political stability, low labour cost and improving regulatory environment

IT used to be China that dominated the news with sexy headlines of growth and development. That distinction is now being shared more and more with Vietnam. Truth is, Vietnam is fast becoming the new China. 

Its economy grew by more than 8% last year. Since 2001, the country’s economy has enjoyed annual growth of more than 7% while its per capita income has doubled to about US$540 in the past decade.  

Unsurprisingly, Vietnam’s World Trade Organisation membership, which took effect on Jan 11 this year, is a big talking point among foreign investors. The membership is expected to boost the country’s exports and draw more foreign investments into Vietnam.  

As it is, Vietnam’s foreign direct investment as a percentage of gross domestic product at 4% is higher than that of any other country in the region, including China. 

Says an analyst with a local brokerage, "Vietnam now has political stability, low labour cost and a young work force with relatively good work ethics. In addition, foreign investors are encouraged by the continuous improvements they see taking place in the regulatory environment for foreign direct investments". 

Apart from streamlining some regulations to entice foreign investments, the government is giving more freedom to the private sector to function as one of the main engines of growth. In addition, privatisation is a buzzword that is fast gaining strength in this latest of Asian tiger economies.  

In other words, Vietnam, which is still in the early stages of development, is providing limitless opportunities for the hoards of foreign companies that have ventured there in recent years. Some Malaysian companies too have taken steps to ensure that they get to enjoy a piece of the action there. 

Exploiting growth further north  

Indeed, there has been a steady flow of news in recent times about local companies scouting for growth prospects much further north. 

A recent example is Tan Sri Vincent Tan’s Berjaya Corp Bhd which entered into a memorandum of understanding with Ho Chi Minh City’s Transport and Urban Public Works Department to undertake a feasibility study on the viability of operating, constructing and financing a monorail system in the city. 

Prior to that, another Berjaya unit, Berjaya Land Bhd, obtained an investment certificate to develop 31ha in Hanoi City for a residential and commercial project. The project has a gross development value of US$350mil. 

To be sure, the country’s need for basic infrastructure has proved alluring for local construction companies like IJM Corp Bhd and Gamuda Bhd. 

In the former’s case, it partnered with another local listed company Salcon Engineering Bhd to undertake a water treatment plant project in Ho Chi Minh City several years ago. They each have a 40% stake in the Binh An water treatment plant which comes with a 20-year concession.  

Gamuda Bhd is another construction player that has been actively looking for opportunities in Vietnam in recent years to ride out the tough operating conditions at home.  

In late January this year, its unit Gamuda Land Sdn Bhd, secured a contract to build an integrated commercial development on an 800-acre site in Hanoi. The project is valued at about US$1bil. 

The group is said to be eyeing another mixed development project and could also be in the running for a RM2bil road project in Vietnam. 

"The property sector alone in Vietnam offers immense potential for Malaysian companies to export their expertise. Rising trends like urbanisation will create a growing demand for companies that have expertise in areas like township development. The country's growing middle class also means that condominium living and gated and guarded housing will become increasingly popular," says an official from a property company with business in Vietnam.  

Vietnam’s young big spender  

A local analyst points out that, initially, it was Vietnam’s cheap labour that attracted the interest of Malaysian manufacturing companies like Furniweb Industrial Products Bhd, APL Industries Bhd and Latitude Tree Holdings Bhd. 

For Furniweb, the diversification strategy proved to be a sound one as its operations in Vietnam currently contribute more to its bottomline than its Malaysian operations.  

In fact, to expand further in the country, the company is seeking to list its subsidiary in Vietnam. 

Rubberwood furniture maker Latitude Tree has invested another RM40mil in a third plant in Vietnam to support two existing ones that are running at full capacity. There are also measures underway to consolidate its Malaysian factories to improve the group’s overall margins.  

But Vietnam’s growing domestic demand and increasing spending power is attracting other types of investors in a big way to the country.  

The bulk of its 84-million odd population is made up of adults in their 20’s. As their purchasing power increases as more and more progress sweeps through Vietnam, this large segment of the population will be hankering to buy higher quality goods to complement their newly attained higher quality of life.  

It is this need that local companies like Haisan Resources Bhd and Ogawa World Bhd are gearing up to meet. 

Haisan’s recent move to sell its 50% equity in a Filipino company could be taken as a sign that the temperature-controlled logistics specialist now intends to concentrate on growing its operations in Vietnam and China. 

On March 14, the company announced the proposed disposal of its interest in Integrated Global Low Temperature Operations Phils Inc to Horizons Realty Inc for RM12.5mil cash.  

Last year, Haisan acquired a plot of land in Vietnam and plans to invest RM13mil to set up a temperature-controlled logistics facility there.  

Its group president and chief executive officer Ong Chin Yet said at the time that the company was gearing up to meet Vietnam’s increasing demand for high-quality food, particularly in the perishable food segment. In time, he said the demand for such facilities would extend to other sectors like pharmaceuticals and industrial products.  

Likewise, main-board bound Ogawa has identified Vietnam as one of the main growth markets it intends to focus on. It is targeting to open 11 outlets by the middle of this year. Most of its new stores will be located in China and Vietnam. 

The Vietnam bug has proved to be too infectious even for large local companies like Malayan Banking Bhd (Maybank) and Telekom Malaysia Bhd (TM). 

At present, Maybank has two branches in Vietnam but has applied for another licence to bring this up to three.  

Given that there are still many restrictions on what foreign banks can do in Vietnam, Maybank’s willingness to invest more in the country’s fledgling banking industry must mean that there is tremendous growth potential there and the bank is pretty certain that the investment will pay off. 

Plans to liberalise the country’s telecommunication sector will be a boon to TM, which has made no secret about its interest in gaining a foothold in Vietnam, which has a low mobile penetration rate. 

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© 1995-2005 Star Publications (Malaysia) Bhd (Co No 10894-D)

Thursday March 29, 2007

Ogawa sees 37% jump in net profit

By Loong Tse Min

KUALA LUMPUR: Main board-bound Ogawa World Bhd expects a 37% rise in net profit for financial year 2007 on strong contribution from the high growth markets of Vietnam and China along with steady expansion in the domestic health and wellness market. 

Net profit for financial year (FY) ended June 30, 2007 is expected to jump to RM16mil from RM11.7mil in FY2006. Revenue is also expected to grow 19% to RM162.4mil for FY2007. 

Speaking at the launch of the company’s prospectus yesterday, executive director Louis Chong said: "With growing affluence, rising disposable income and an increasingly health conscious society, we are optimistic on the prospects of the health and wellness industry." 

The company expected a 20% growth in the sector regionally for calendar year 2007, Chong said. 

Ogawa is targeting revenue contribution from its overseas operations to double to 40% in the next three years. In the shorter-term, overseas sales were expected to account for 25% of total revenue for FY2007 from 20% in 2006, Chong said. 

The company is aiming to open 11 new outlets, mainly in China and Vietnam, to achieve a total 160 outlets by June 2007. 

From left: Executive chairman Richard Wong, Public Investment Bank CEO Teoh Cheng Soon and Louis Chong

Of its 149 outlets, 114 come directly under the group and are located in Malaysia, Singapore, China and Hong Kong. The balance 35 are operated through exclusive distributorships in Indonesia, Australia and Vietnam. 

Ogawa plans to open its first outlet in the Middle East - in Dubai - by year-end. It is also exploring the market in India and Thailand. 

Scheduled for listing in April, Ogawa is offering 17.2 million new 50 sen shares, of which six million will be allocated for the public at an issue price of RM1 each.  

It is also offering 36 million shares to approved bumiputra investors. 

The exercise is expected to raise RM31.9mil, of which RM15mil has been earmarked for land and building acquisition within 24 months. 

"We are looking at somewhere nearer to port, maybe in Kota Kemuning (Shah Alam)," Chong said, adding that the move was expected to double Ogawa’s warehousing space to two acres. 

The company also plans to use RM1.2mil to double its fleet of delivery trucks to 40 within two years. 

"We are aiming to cut delivery time to three days from seven days currently," Chong said. 

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© 1995-2005 Star Publications (Malaysia) Bhd (Co No 10894-D)

Monday March 19, 2007

Ogawa planting its flag in more export markets

By YVONNE TAN

HEALTH and wellness equipment retailer Ogawa World Bhd wants to penetrate the Middle East, Indian and Thai markets over the next three years. 

Executive director Louis Chong said it would start by establishing an office in each of these countries. 

"We think the Middle East is a good choice because of the people’s purchasing power. We like India and Thailand for their huge population and existing traditional massage culture, respectively," he told StarBiz.  

"We have been researching these countries for the past two years and understand the buying patterns of its consumers."  

Executive directors Louis Chong and Lim Mee Ling with some of Ogawa’s massage chairs.

Ogawa is a health and wellness retail chain store that over the years has become a household name in Malaysia. It designs, develops and retails its products such as massage chairs, slimming equipment, blood pressure monitors and air purifiers under its brands Ogawa and Deki. 

The company is slated for a listing on the main board of Bursa Malaysia early next month.  

"Ogawa started out being involved in the trading of household and electrical products in 1986 and 10 years later, ventured into the health wellness equipment industry," Chong said. 

He said the company’s products were now divided into five main categories – relaxation, therapeutic, fitness, diagnostic and hygiene.  

"Our main revenue generator are the products under the relaxation category, which include massage chairs and pillows," he added. 

Currently, almost 80% of the group’s revenue comes from its local operations while the remainder is from overseas markets. 

"We intend to increase the overseas contribution to at least 40% within the next three years," Chong said.  

Ogawa has a total of 107 sales and distribution outlets in Malaysia, Singapore, China and Hong Kong. It also has 29 outlets through exclusive sole distributors in Indonesia, Australia and Vietnam.  

"Our immediate market expansion plans are focused on Vietnam and China," Chong said, adding that these countries had a lot of potential due to their high populations.  

The company already has three offices in China, one each in Beijing, Shanghai and Shenzen.  

As part of its expansion plans, Ogawa will come up with at least five new products this year. "About 8% to 10% of our revenue is spent on the development of new products yearly," Chong said. 

The company also pays a lot of attention to customer relationship management. "We emphasise after-sales service as we want customers to keep coming back to us," he said. 

Chong said the name Ogawa meant "stream" in Japanese. "And that is how we like to think of our business – starting from a river source and slowly flowing and evolving into the mighty ocean," he said. 

For the financial year ended June 30, 2006, Ogawa posted an after-tax profit of RM11.69mil on revenue of RM136.06mil. 

The company’s initial public offering (IPO) involves the offer for sale of 36 million shares to bumiputra investors and the issue of 17.2 million new shares to the public, directors, employees, persons who have contributed to the group’s success as well as for private placement. 

The par value would be 50 sen and the offer price RM1. It aims to raise some RM32mil from the IPO.  

"The company will use the proceeds for, among other things, market expansion, research and development, as well as land acquisition," said Chong.  

"We are confident on the prospects of our stock. We believe the current volatility in the market is temporary and that we should do well."  

Chong is optimistic that the health and wellness sector will continue to experience growth.  

According to him, the local industry was valued at about RM300mil last year, up from RM130mil in 2002. "This figure is expected to double over the next five years," he said. 

Ogawa has appointed Public Investment Bank Bhd as adviser, managing underwriter, and placement agent for the IPO, while MIMB Investment Bank Bhd is the underwriter for the exercise.  

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© 1995-2005 Star Publications (Malaysia) Bhd (Co No 10894-D)

Tuesday Feb 06, 2007

Ogawa to raise RM32m from IPO

By Isabelle Francis & Yap Yew Jin

Main Board bound Ogawa World Bhd, which manufactures health and wellness equipment, plans to raise RM32 million from its listing exercise.

Executive director Louis Chong said on Feb 5 the listing proceeds would be used to finance local and overseas expansion, including delivery trucks, product development and working capital.

He said details of the listing would be released in the prospectus by early March. The initial public offer involves the sale of 36 million shares to Bumiputera investors approved by the government and 17.2 million new shares.

Of the 17.2 million new shares, he said 5.2 million would be placed out, six million offered to the public and another six million to eligible directors and employees.

The par value would be 50 sen and the offer price RM, he said after signing an underwriting agreement with Public Investment Bank Bhd and MIMB Investment Bank Bhd in Kuala Lumpur involving 12 million shares for the public, directors and employees. Ogawa posted a net profit of RM11.69 million on the back of RM136.06 million in revenue for the financial year ended June 30, 2006.

Chong said Ogawa had over 40% market share of the health and wellness equipment in Malaysia estimated at RM300 million. He expects annual double-digit growth in the total number outlets and revenue in the next few years. Ogawa owns 107 distribution outlets while another 29 are owned by its distributors. Local sales account for 70% of total revenue.

"Our listing status will enhance the group's corporate profile and enable us to fund our future expansion to strengthen our position as a major player in the regional health and wellness industry," he said.

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Source: The Edge Daily

Tuesday Feb 06, 2007

Ogawa to raise RM32m from IPO

OGAWA World Bhd, a homegrown retailer of electrical massage products, plans to raise some RM32 million from a rights issue and an initial public offering (IPO) on the main board of Bursa Malaysia.

The company, which has more than 40 per cent of Malaysia's RM300 million health and wellness market, currently offers 23 products, including electrical massagers, slimming devices and blood- pressure monitors.

It is slated for a listing by end-March.

Ogawa plans to use the proceeds to buy a piece of land to site a new warehouse and acquire a fleet of trucks, executive director Louis Chong said.

"We hope to do it (IPO) as soon as posible as the market sentiment is good," Chong told reporters in Kuala Lumpur yesterday after the underwriting agreement signing ceremony for Ogawa's flotation.

It has appointed Public Investment Bank Bhd as adviser, managing underwriter, and placement agent for the IPO, while MIMB Investment Bank Bhd is the underwriter for the exercise.

Also present were Ogawa executive chairman Richard Wong, Public Investment chief executive (CEO) Teoh Cheng Soon, and MIMB executive director cum CEO Mohd Farid Datuk Nawawi.

Since the launch of Ogawa's first outlet in 1996, the Shah Alam, Selangor-based entity has grown its distribution channel to 107 stores across Malaysia, Singapore, China and Hong Kong.

These are on top of its 29 external exclusive dealers in Indonesia, Australia and Vietnam. While Ogawa does the research and design, the products are made by contract manufacturers in China, Japan and South Korea.

In the year to June 30 2006, overseas buyers made up 21 per cent of its RM136.1 million proforma revenue.

Last year sales jumped 35 per cent from RM100.5 million earned in 2005. Profit after tax in 2006, meanwhile, grew 26 per cent to RM11.7 million. It plans to grow revenue by double digits annually.

Moving forward, the company also plans to make further inroads into Vietnam and China which are deemed high- growth markets, Chong said.

Ogawa's IPO involves an offer for sale of 36 million Ogawa shares by its shareholders to Bumiputra investors, and an issue of 17.2 million new shares. The indicative IPO price is RM1 per share.

Of the 17.2 million securities, two tranches of six million units each are earmarked respectively for the local public, besides directors, workers, and key individuals in Ogawa. The remaining 5.2 million shares are for private placement to selected investors. Ogawa's listing prospectus is due for release next month.

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Source: Business Times

Wednesday August 22, 2007

OGAWA pre-tax profit up 16.8pc

OGAWA World Bhd has posted a 16.8 per cent increase in pre-tax profit to RM22.2 million for its financial year ended June 30, 2007, when compared to the previous year.

Its revenue went up 7.6 per cent to RM146.4 million, the company said in a statement today.

OGAWA said although the profit performance was marginally below the company's forecast made at its listing in April this year, the result marked a healthy uptrend.

Describing the overall performance as "highly satisfactory", executive director Louis Chong said the decision to fully expense start-up costs in new overseas markets accounted for a substantial percentage of the deviation.

Chong said OGAWA plans to continuously introduce new models as well as new range of products into the market.

He said for overseas, the company would focus on expanding its reach in high growth markets such as China and Vietnam.

According to Chong, OGAWA expects to sustain double-digit earnings growth in the current financial year ending in June 2008.

Sales growth in Malaysia is expected to remain robust and the company's increasing presence in overseas markets will translate into positive bottomline contribution, he said. - Bernama

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