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KUALA LUMPUR: Esthetics International Group Bhd (EIG) executive chairman Eddy Chieng is hopeful that the company will turn the corner this year.

To achieve this, he said several measures have been taken that could bear fruit for EIG.

For example, EIG had ceased manufacturing two brands under its stable — Bioxil and Dermaheal. It is focusing on two brands, Dermalogica, its professional series of skin care products, and Clinelle, its skin care line which is distributed to independent pharmacies. Other brands under EIG’s stable include Aster Spring and Leonard Drake.

EIG currently has 64 outlets offering their products and services, and the company plans to increase the number to 100 within the next three years. The expansion could help turn things around at EIG.  

At present, there are 31 salons in Malaysia offering EIG’s products and Chieng plans to increase this number to 50. Singapore currently has 12 outlets and EIG hopes to add eight outlets. EIG also has eight outlets in Hong Kong and six in Bangkok, among others.

“We want this year to be a turnaround year. We have achieved much improvement on the products segment… but I still think there is room to grow,” he said after the company’s EGM yesterday.

Other plans being executed include EIG gradually penetrating the China market, starting with product distribution with the many independent pharmacies in the country.

Chieng stressed that the growth in China will be gradual and is hopeful the first three years spent establishing EIG in China will yield some profit.  

“We are not going to expand in China in a big way and make mistakes. For the first three years in China, we are very much on foundation building,” Chieng added.

He said EGI officials are still evaluating the capital expenditure (capex) to be allocated for the China expansion plan.

Chieng revealed that EIG had committed RM15 million in capex into buying landed property, to house EIG’s main office in Hong Kong. He also disclosed that the company is eyeing property in Singapore as well.

“We want to demonstrate our commitment to the staff there that we are there for the long term,” he explained. After things are settled in China, the next foray for EIG is likely to be Indonesia, he added.

Much of the expansion will be funded by a rights issue that was given the green light by shareholders at the EGM earlier. EIG had proposed a rights issue of 52.8 million new 50 sen shares on a two-for-five basis, with a free warrant thrown in as a sweetener for every rights issue subscribed.

Apart from the rights issue, which raised RM24.6 million, Chieng said EIG has other funds allocated for expansion purposes.

“We not only have the additional funds from capital raising but also positive cash flow from our business as well. In fact, we have banking facilities that remain unused amounting to RM25 million.

“The company in all has nearly RM60 million available funds to invest,” Chieng added.

On EIG’s plans to expand while bleeding losses, Chieng denied the company is financially beleaguered, and maintained that EIG’s cashflow has always been cash positive.

For its financial year ended March 2011, EIG suffered a net loss of RM40.49 million on the back of RM141.09 million in sales. The company suffered a loss per share of 30.68 sen.

For FY10, EGI bled net losses of RM656,000 on RM169.99 million in sales.

In notes accompanying its financials, EGI said the losses were a result of inventories written off amounting to RM15.6 million, deferred revenue of RM13.7 million and losses of RM4.8 million due to discontinuation of some operations.

As at end March this year EGI had cash and cash equivalents of RM11.38 million. The company’s short-term borrowings stood at RM5.84 million while its long-term-debt commitments were negligible at RM32,000.

EGI’s stock drifted to a 52-week low of 43.5 sen on July 14. It ended trading at 46 sen yesterday, inching up one sen.


This article appeared in The Edge Financial Daily, August 11, 2011.

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