KUALA LUMPUR (Aug 7): Stone Master Corp Bhd has become the exclusive agency of Hong Kong-incorporated Lion Legend Holdings Ltd and China-incorporated Guangdong Be-Tech Security systems to design, distribute and install their respective products in Malaysia and Singapore.

In its filing to Bursa Malaysia today, Stone Master said it has entered into separate exclusive agency agreements (EAA) with the two today to effect the tie-ups, which it will have to fork out a collective RM230 million as one-time ‘initial agency fees’.

However, Stone Master, which closed 1 sen or 3.57% lower at 27 sen today for a market capitalisation of RM25.17 million, did not specify as to how it intends to fund the agency fees. As at March 31, its cash and bank balances stood at only RM417,000, with total assets valued at RM57.6 million.

Meanwhile, in the HoA it had inked with Lion Legend prior to the signing of the EAA, Stone Master said the deal will grant it the rights to design, distribute and install the ‘ROY’ ceramic sanitary ware products in Malaysia and Singapore.

Lion Legend specialises in the development and production of various types of ceramic sanitary ware products and is a wholly-owned unit of Germany-listed ROY Ceramics SE.

In return for the RM150 million initial agency fees, Lion Legend will provide Stone Master with an assured profit guarantee of 30% of the gross contract value that the latter secures in the future, with a one-time initial kick-off package in the form of products and services, worth RM130 million.

Stone Master said this tie-up will enable it to diversify and expand its current revenue base. Its traditional business is now primarily in granite and marble products, ceramic floor tiles and sanitary wares, which it said is a highly competitive market.

“This newly-established alliance will enhance Stone Master’s leading role in the Malaysian building materials industry and move up the value chain by making available high-end quality ceramics sanitary ware and bathroom accessories under the world renowned brand of ‘ROY’ to Malaysian market,” the group’s executive chairman Datuk Eii Ching Siew said in the filing today.

Separately, the group has also entered into an exclusive agency agreement for which it will pay an initial agency fee of RM80 million to Guangdong Be-Tech Security Systems to design, market and install the latter’s ‘BE-TECH’ electronic security locks.

In return, Guangdong Be-Tech will provide Stone Master with an assured profit guarantee of 30% of the gross contract value that the latter secures in the future, with a one-time initial kick-off package in the form of products and services, worth RM65 million.

The respective tenure of both the EAAS is five years.

It also stated that risks associated with the tie-ups — which is, if it fails to secure any business for the respective products and services — are minimised, as the products were in line with Stone Master’s core business over the past two decades.

Stone Master added that the EAAs will contribute significantly to its overall trading profit.

Furthermore, it said the one-time kick off packages from Lion Legend and Guangdong Be-Tech, worth RM195 million, together with the profit guarantees given by both principals, “already assures the profitability of any contract secured under this trade”.

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