Korea's Cuckoo set for Malaysia debut after scaling down IPO
(Bloomberg) – A subsidiary of South Korean home-appliance maker Cuckoo Holdings is set to go public in Malaysia after a scaled-down offering that's expected to raise RM395 million (S$119.4 million).
Cuckoo International (Mal) will begin trading on June 24, two months after postponing its initial public offering due to market volatility. The final amount raised may vary as the company is waiting for approval from the bourse to reduce its public shareholding spread to 20 per cent from the current 25 per cent.
Its revised offer price of RM1.08 per share, from RM1.29 previously, will value the company at RM1.55 billion.
The company's debut will be closely watched for clues on demand for consumption stocks given the tepid retail subscription rate for Cuckoo. Chief executive officer Hoe Kian Choon is confident that its prospects and sizeable market share in the local home-appliance rental segment will draw investors.
'A lot of our investors were happy' that the offering was put off to ride out the volatility sparked by the US tariff announcement in April, Hoe said in an interview. 'None of our cornerstone investors left.'
While market uncertainty remains high, the situation is 'more stable now,' allowing the company to revive its listing plans, he said.
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Hoe, who founded the local company in 2014 as a distributor of Cuckoo products, has grown the business on the strength of its water purifier rental segment. Cuckoo Malaysia also co-creates some new products with other brands for the domestic market.
The company's promising outlook prompted its Korean supplier to take up a majority stake in the Malaysian firm. Hoe said Cuckoo Malaysia has secured nearly a fifth of the local appliance rental market and opportunities to cross-sell products among its one million active-subscriber base would help the company achieve double-digit revenue growth over the next few years.
Cuckoo Malaysia's profit after tax for the first nine months of 2024 jumped 75 per cent from the previous corresponding period to RM104 million. Revenue rose 13 per cent.
'Malaysia's market is growing not only in number of households but also in household debt,' Hoe said. 'Malaysians are looking for the best way to actually maximize their value for money. Rental will be one of the ways for them to enjoy a standard of living.'
Korean rival Coway's wholly-owned local unit currently has market leadership in the rental space. Hoe, a former Coway executive, aims to catch up with other Cuckoo offerings including mattresses, massage chairs and air purifiers.
Consumer brands that are centred on mass-market affordability have done well in Malaysia. Two of the country's biggest IPOs in the past year were retail chains that catered to customers looking to stretch the dollar – mini-mart operator 99 Speed Mart Retail Holdings and dollar-store chain Eco-Shop Marketing.
Hoe said Cuckoo's business fundamentals remain sound given little exposure to external shocks. While it is vulnerable to a stronger US currency – the company buys stock from its Korean parent in dollars – strong recurring income from its rental segment helps ease the pressure.
Cuckoo will use proceeds from the IPO to open new concept stores that will allow cash-and-carry purchases and expand its business in Singapore. BLOOMBERG
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