RNS Number:1839J
FoaMasters International Limited
05 December 2007
Immediate Release 5 December 2007
FoaMasters International Limited
("FoaMasters" or "the Company")
ADMISSION TO AIM
&
FIRST DAY OF DEALINGS
FoaMasters International Limited (AIM: FOAM), a leading manufacturer and
producer of polyurethane flexible foam and finished products is pleased to
announce its admission to AIM and the commencement of dealings in its shares.
On admission FoaMasters will have a market capitalisation of approximately US$64
million.
Highlights
*The FoaMasters Group, founded in 1964, is a leading manufacturer and
producer of polyurethane flexible foam and related finished products within
the Asia Pacific region. FoaMasters produces a wide range of high quality
flexible polyurethane foams including flame retardant, memory, high
resilience, injection moulded and environmentally friendly foams for use in
a variety of industries including bedding, footwear and furniture.
* For the nine months ended 31 December 2005, the Group had revenues of
approximately US$38.9 million. In 2006 revenues had grown to US$72.2 million
with profit before tax of approximately US$6.7 million and for the 6 months
ended 30 June 2007 revenues of approximately US$44.3 million with profit
before tax of US$3.5 million.
*As at 31 December 2006, approximately 75 per cent. of the Group's revenue
was attributable to the sale of raw foam which was made into finished
products such as furniture, footwear and bedding by Chinese OEM
manufacturers.
*These products were principally exported to branded retailers in the USA,
Canada and Europe including Wal-Mart, Aprica, LA-Z-BOY, Nike, Adidas,
Littlewoods, Land of Leather, Primo, JC Penny, IKEA, Staples, Office Depot,
Office Max, Steinhoff Furniture, SpringAir, Toy R US, Target and Bed Bath
and Beyond.
*During the same period, 15 per cent. of the Group's total revenues were
generated from the sale of finished products which comprised S'fonia bedding
products and those which were manufactured for retailers such as Littlewoods
and Wal-Mart under whose brands the products are marketed. S'fonia is
FoaMasters' own brand of bedding products (mattresses, pillows and
cushions), which was launched in 2006.
*FoaMasters currently operates six factories in China and a further two in
Vietnam, employing over 1,900 personnel. The ninth and tenth factories are
being established in Jiashan, and Heshan, China respectively and are
expected to be operational by the end of 2007. The latter plant will focus
on the production of finished goods and environmentally friendly foams.
* The Group has numerous accreditations including SATRA and the
International Standards Organisation ISO 9001 and ISO 14001 certifications.
In addition, the Group's products have been accredited Fire Retardant
Standard BS5852 (UK) and CAL TB 117 (US), which is advantageous to the
Group's marketing in Europe and the USA.
Mr Jack Cheong, CEO of FoaMasters, commented
"We are delighted to be admitted to AIM and look forward to building our profile
over the coming years. We have a robust and fast growing business, which is
capitalising on the demand for specialist foam products and we anticipate
significant growth in both the revenues and profits of the company in the short
to medium term."
Hanson Westhouse Limited is the Nominated Advisor and Broker to FoaMasters.
For further information please contact:
FoaMasters International Limited +852 2887 7361
Jack Cheong, Chief Executive Officer
Richard Cheong, Deputy Chief Executive Officer
Teh Kim Seng, Non-executive Chairman
Hanson Westhouse Limited +44 20 76016100
Tim Metcalfe
Anita Ghanekar
Martin Davison
Christine Zhang
Buchanan Communications +44 20 74 66 5000
Ben Willey benw@buchanan.uk.com
Suzanne Brocks
Nick Melson
Christian Goodbody
Notes to Editors:
History of FoaMasters
*Founded in 1964 initially focusing on latex foam and rubber related
products
*1974 - Production switches to polyurethane based foam products
*1992 - First mainland Chinese plant established in Zhongshan City
*1995 - Management and headquarters relocated to Hong Kong
*2000 - Expansion into Vietnam through a joint venture with Yue Yuen
Industrial Holdings
*2006 - 8 plants operational within FoaMasters Group
*2006 - Established S'fonia own label
Environmental Technology Adoption
The Company has developed a range of environmentally friendly flexible
polyurethane foam products including CFC free foam and memory foam for energy
absorbent applications and the bedding industry. Recent innovations include the
production of micronised PU powder which is made through the recycling of scrap
foam by employing technology licensed from Mobius Technologies Inc. in the US.
The product is used as a substitute for the more traditionally used raw
material, polyols, whose market price has been fluctuating since 2004. The Group
aims to produce a series of foam products in late 2007 utilising this technology
and eventually the technology will be used in all the Group's products. The
Directors believe that the ability to recycle scrap foam which will be mainly
supplied by its own production waste will reduce production costs and open up
further sales opportunities to more environmentally conscious markets including
the EU and the US. The Group also intends to commence production of latex foam,
sourced from organic raw materials, and is currently increasing production of
rebonded scrap foam for use as carpet underlay.
The Directors are seeking to take advantage of the substantial growth potential
which they believe exists to further consolidate its position as a leading
China-based foam producer to domestic and overseas markets. In particular, the
Group will seek to capitalise on the growth of the Asian foam market which has
been driven by a large proportion of global production moving to China due to
low production costs and increasing domestic demand.
Foam industry
The foam industry has seen the evolution of foam produced from the curing of
latex rubber in the 1930s to the synthetic plastics and polymer industry
produced today. Currently, foam materials and products are primarily polymer
based. The industry now produces different types of foam materials ranging from
more flexible materials used in furniture and for comfort purposes to more
durable materials for industrial use, such as panels for the building industry.
Polymer-based foams are predominantly used in the application of flexible foam,
mainly made from polyurethane. More than half of foamed plastic is polyurethane,
other foams consist of expandable polystyrene, vinyl, phenol, epoxy, urea and
silicone.
Export market
Demand for foam products continues to be generated from Europe and the US. In
these regions there is a greater requirement for exports to meet strict
environmental and safety specifications. To comply with new regulations from
these markets, brand owners are resorting to CFC free and recyclable foam
materials including polyurethane and high end latex foam. Increasingly, sourcing
is channelled through to Asian manufacturers (including OEM finished product
manufacturers) resulting in the demand for foam materials in China having grown
rapidly over the last ten years. This has, in turn, led to the growth and
success of companies such as FoaMasters in recent years. One of the key industry
drivers for growth in the demand of foam materials and products has been, and
continues to be, demand from the furniture and bedding industry. The US is the
world's largest market for mattresses, with revenue topping US$4.5 billion in
2005. China, in addition to its domestic demand, has also become the world's
largest manufacturer and exporter of mattresses, with its exports increasing by
25 per cent. between 2004 and 2005 (Source: 2005 World Mattress). This has been
partly due to the shift in manufacturing to Asia (particularly China) from the
West. China accounted for 25 per cent. of the 2004 annual global demand for
PU-based products (Source: IAL Consultants 2005).
Chinese domestic market
Chinese domestic market demand for foam products is expected to be maintained
during the period from 2004 until 2009 especially for PU flexible slabstock. Due
to a number of factors including higher levels of disposable income as a result
of a growing economy, a recent boom in the travel and tourism industry;
estimates suggest that approximately 2,000 hotels with over 300,000 rooms are to
be renovated and refurbished with a budget of approximately US$1.3 billion over
the period. Similarly, growth in the service and real estate sectors, the rapid
growth of the automotive industry and the increasing number of new families,
with more than 20 million couples married since 1998 are all factors that have
contributed to a large increase in domestic demand for PU foam. Chinese foam
production capacity is expanding in line with increasing overseas and domestic
demand. In 2004, Chinese production was over 587,000 tonnes, of which 82.5 per
cent. was slabstock (blocks of raw foam) and 17.5% was injection moulded foam,
most of which is used in seating for transport. It was estimated that production
of flexible PU foam is expected to exceed 1.0 million tonnes by the end of 2009,
indicating an annual growth rate of 11.6 per cent. per annum since 2004. On a
regional level, this growth rate is higher, at 12.9 per cent., in the South
Middle region of China where FoaMasters' current activities are located.
Vietnam
As international shoe companies shift their production from developed countries
to lower cost economies, Vietnam has become established as a significant
footwear supplier to major markets all over the world. Footwear output in
Vietnam is mainly sold to the EU, Japan and the US. In 2006, the Vietnam
footwear market had an estimated value of US$3.65 billion, a 16% increase over
2005 and US$1.2 billion in the first four months 2007, representing an 11%
increase over the same period the previous year.
Strategy
The Group's strategy is to leverage on its in-depth expertise in the design and
manufacture of polyurethane flexible foam products to expand its business and
consolidate its position as the premier PRC-based foam producer to the Chinese
export markets. In particular the Directors intend to implement the following
strategies:
- Expand production capacity to meet increasing demand for PU flexible
foams from both domestic and overseas markets;
- Extend the current product range to include environmentally friendly
products;
- Focus and invest in private labelling of soft foam for the bedding
industry;
- Improve the overall profit margins of the Group; and
- Build a stronger sales and marketing network to access new markets.
These expansion plans are intended to enable the Group to take full advantage of
growth in the higher value markets in the US and the UK over the next 3 years
and to provide a focus on catering to the growing demand in the Chinese and
other Asian markets as a result of general economic growth.
Raw foam manufacturing is expected to see high growth as the Group plans to
establish at least one new foam plant annually over the next three years. The
Directors expect there to be continued growth in the market for finished
products and the revenue contribution from these finished products is expected
to range between 15 per cent. to 20 per cent. in the next 3 years.
Intellectual property
The Group employs and develops in-house technologies and processes to improve
operational performance. The Group manufactures and develops its own PU
manufacturing plant and equipment. The Group is in the process of applying for
the registration of ten patents in PRC various designs of PU machinery, tools
and products. The Directors believe that by making its own machinery and
equipment, FoaMasters is able to better manage and control product quality and
capacity growth.
In addition, FoaMasters has developed a proprietary production and materials
resource planning system named JustFoam(TM) to automate and enable just-in-time
manufacturing, efficient tracking and delivery to customers. FoaMasters has,
over the years, developed and improved its proprietary formulations for over
1,500 products through its R&D laboratories based in Dongguan and Zhongshan in
the PRC. These formulations are refined, used and integrated with the JustFoamTM
planning system to enable an efficient end to end production process.
Directors
Mr (Jack) Cheong Chi Vai, Chief Executive Officer, aged 42
Jack has more than 15 years experience in the PU industry and started his career
with SEA Foam Rubber MFR (Macau) in retailing bedding products. There, he
learned the basics of the foam rubber and PU foam business. 3 years later, he
moved to South Asia PU Products Manufacturing Ltd. to become the General Manager
of the company. Through his stewardship, the company acquired Foamtech
manufacturing and expanded into Vietnam. Today, as the CEO of FoaMasters, he
oversees the Group's foam manufacturing business and sets the business strategy
for the Group. Jack is an Information Science and Computer Science graduate from
National University of Singapore and is currently pursuing an MBA from Open
University of Hong Kong and is scheduled for graduation in 2008.
Mr (Richard) Cheong Chi Kit, Deputy Chief Executive Officer, aged 42
Richard, the twin brother of Jack, has more than 13 years experience in the PU
industry and began his career in polystyrene manufacturing for 4 years before
venturing into trading of electronic components in Singapore for 3 years. He
then established a furniture retailing and interior design company in Hong Kong
prior to joining Jack to manage and expand FoaMasters' business in and outside
China. Richard currently manages the day to day operations, finance and
direction of the business with Jack and Alan. Richard holds a Bachelor of
Engineering (Hons) in Electrical Engineering from the National University of
Singapore and an MBA in Banking and Finance from the Nanyang Technology
University in Singapore.
Mr (Alan) Teo Chee Keong, Executive Director and Vice President, Engineering,
aged 45
Alan has over 18 years experience in the PU industry and has been involved in
all aspects of the business. He is currently the Vice President, Engineering for
the Group. He is key in driving the foam making machinery design and production
business. His role has been significant in providing know-how and competitive
advantage to the Group through R&D and manufacturing of the equipment used
throughout the Group. Alan graduated from PACE University, New York with a
Bachelor of Business Administration. Alan is currently pursuing an MBA from
University of Northern Virginia.
Mr Teh Kim Seng, Non-executive Chairman, aged 41
Kim Seng's experience spans the legal, corporate advisory, M&A, venture capital
and technology industries in Asia. Kim Seng trained in London, then in Hong Kong
and has undertaken engagements in M&A and corporate finance including
transactions such as the listing of companies in Hong Kong and London and
cross-border M&A. He has extensive experience in advising, managing and
operating technology and high growth companies in Asia having previously
successfully invested in, advised and taken interim positions in many such
companies. Currently, he sits on the boards of directors/advisors of various
public companies including Pixel Interactive Media Limited, quoted on AIM,
Softlead Inc, a NASDAQ listed company and Flextech Holdings Limited, a
semiconductor group listed on the main board of the Singapore Stock Exchange.
Kim Seng holds an LL.B. (Hons) from Leeds University, England and an LL.M.
(Hons) from Queens' College, University of Cambridge, England.
Mr Aron Ng, Non-executive Director, aged 60
Aron has broad experience in business management and over 30 years experience in
the chemicals industry, holding key positions in large multinational chemical
companies. His last key position was managing Shell's polyol and polymer
businesses in China during his 14 year tenure as business manager. Aron also has
had over 13 years with ICI in the UK and PRC in various key positions including
product manager for key markets in China, Korea, Vietnam and Cambodia. Aron
graduated with a BSc. (Hons) degree in Chemistry from the University of London
in 1970 and a Ph.D in Physical Organic Chemistry from University of London in
1974. Aron is fluent in English, Mandarin and Cantonese.
Mr Hugh Bevan, Non-executive Director, aged 46
Hugh qualified as a chartered accountant in London and then joined Robert
Fleming in 1987. In 1990 Hugh transferred to Jardine Fleming working initially
in Indonesia and then in Hong Kong. There he worked on a wide range of corporate
finance transactions in Hong Kong and in other Asian countries. In 1997 he
became Chief Operating Officer of Jardine Fleming's Asian Corporate Finance
business before returning to Robert Fleming in London in 1999 working in equity
capital markets. In 2002 Hugh joined Aero Inventory PLC as Finance Director, the
position he currently holds. Aero Inventory PLC is an AIM quoted provider of
inventory management and procurement services to the aerospace industry.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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