This article first appeared in Capital, The Edge Malaysia Weekly on December 9, 2024 - December 15, 2024

CARLO Rino Group Bhd (KL:CRG) has adopted a cautious stance on the retail outlook as the group gears up for its listing transfer to the ACE Market from the LEAP Market on Dec 18.

While acknowledging rising operating costs and subdued consumer sentiment as key hurdles, its group managing director Datuk Seri William Chiang Fong Yee believes the tide is turning, spurred by the imminent civil servants’ pay hike and upcoming festive spending.

“So, hopefully, with the increased wages for civil servants, they will have spare money to buy our products. I believe the pay hike for civil servants will benefit the whole retail segment,” he tells The Edge.

With more than 100 sales points in the local market, the group’s main revenue is from brick-and-mortar stores. It has a presence in 40 boutique shops and 80 department stores, contributing 87% (RM91.27 million) to its total revenue of RM104.85 million in the financial year ended June 30, 2024 (FY2024).

Carlo Rino is not resting on its laurels, given the expected implementation of a higher minimum wage and petrol rationalisation next year.

Chiang stresses that branding remains a cornerstone of the group’s growth strategy, and it is doubling down on its marketing efforts via continuous innovation in product offerings to sustain customer interest and drive sales, even in the competitive and rising cost environment.

“Because Carlo Rino caters for the mass market, we plan to introduce 50 new designs for our products every month to attract customers,” he says, noting that efforts are being made to build its branding via social media.

Its e-commerce platforms have been gaining traction, with online sales contributing RM13.47 million, or 12.85%, to its FY2024 revenue, up from RM11.32 million, or 9.97%, in FY2023.

Part of its IPO proceeds will be invested in IT upgrades and cloud-based tools, ensuring seamless integration with third-party marketplaces such as Shopee, Lazada, Zalora and TikTok Shop.

Despite challenges faced, Carlo Rino maintained a solid gross profit margin of more than 60% over the past three years — 61.94% in FY2022, 61.71% in FY2023 and 62.82% in FY2024.

Chiang says the group is looking to sustain its gross profit margin by expanding its current product range to ensure its products remain relevant and appealing.

The group also intends to adopt an asset-light model for its regional expansion, particularly in Southeast Asia, where it collaborates with local distributors and engages with online platforms to sell its products.

Carlo Rino has committed to a dividend policy of distributing at least 30% of its annual net profit as dividends to its shareholders.

In FY2024, the group made a dividend payout of RM8.06 million, representing 41.73% of its profit after tax of RM19.3 million.

Carlo Rino is a net cash company with cash and cash equivalents of RM46.96 million and short-term funds of RM9.09 million as at end-June 2024. Its term loans stood at RM7.5 million.

The group made a record net profit of RM23.85 million on the back of revenue of RM113.53 million in FY2023, attributed to the post-pandemic pent-up demand and the special Employees Provident Fund withdrawal facility of RM10,000.

Its net profit slipped 19.06%, however, to RM19.31 million in FY2024, as revenue dropped 7.65% to RM104.84 million from RM113.53 million, owing to the normalised demand, listing expenses for the IPO as well as the absence of disposal gains.

Carlo Rino — well known for its women’s handbags, footwear and accessories — first proposed the listing transfer in August last year. It was listed on the LEAP Market in November 2018.

Its IPO comprises a public issue that will raise RM46.4 million, involving 48.88 million new shares for the public, 800,000 shares for eligible persons and 122.19 million shares through private placement to bumiputera investors.

The IPO price of 27 sen apiece values the company at close to 14 times its trailing earnings based on its net profit of RM19.31 million for FY2024.

Half of the funds raised have been earmarked for working capital, including the purchase of inventory (RM10.2 million), rental payments for its boutique stores (RM10 million) as well as advertising and promotion expenses (RM3 million).

The IPO funds will also be used for the construction and fitting out of a new flagship boutique; refurbishment of existing boutiques and counters at departmental stores; as well as maintenance of IT infrastructure.

Carlo Rino is controlled by Chiang and his father, Chiang Sang Sem, who is the founder of Main Market-listed Bonia Corp Bhd (KL:BONIA). Both will see their shareholding in Carlo Rino diluted to 26.3% and 42.19%, from 31.91% and 51.19% respectively.

Post-listing transfer, Carlo Rino is expected to have a market value of RM263.93 million. 

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