KUALA LUMPUR (March 26): Cuckoo International (MAL) Bhd, en route to the Main Market, is expecting growth in income from rental of its products partly backed by an expansion in its offerings.

The local unit of South Korean appliance maker Cuckoo Electronics Co Ltd is aiming to add one more Cuckoo-branded product, raising the total offerings to 55 this year while expanding its co-created product lineup to 11 from 10.

Hence, the company is expecting year-on-year growth on its products' rental income, chief financial officer Bryan Yeong told reporters after the company’s initial public offering prospectus launch.

Cuckoo International is mostly known in Malaysia for renting out electrical items such as water purifiers and rice cookers. Rental of products accounted for 61.4% of total revenue, followed by aftersales maintenance services at 37.8% and outright sale of products at 5%.

The company’s other segments, including WonderLab and WonderDewi, focusing on skincare and food nutritional products, make up less than 1% of its revenue. There are plans to expand its WonderLab and WonderDewi product offerings from 31 to 42 by 2025.

While WonderLab and WonderDewi have growth potential, “we do not expect these products to surpass Cuckoo-branded products or Cuckoo co-created products in revenue contribution anytime soon”, said Yeong.

Cuckoo-branded products contributed 95.8% of the revenue and co-created products such as a massage chair with Ogawa accounted for 2.9% while the rest came from WonderLab and WonderDewi products sold in Malaysia at Watsons’ health and beauty retail chain.

Apart from product expansion, Cuckoo International also plans to open 10 cash-and-carry retail outlets nationwide by 2026. Additionally, the company intends to establish five third-party retail outlets in Singapore.

Asked about the 23.38% rise in trade and other receivables under non-current assets — which grew to RM600.5 million in FY2023 from RM486.73 million in FY2021 — Yeong stressed that repayment remained stable with a collection rate of 97.4% and an average impairment of 4% across all receivables.

Cuckoo International reported a profit after tax of RM86.87 million in FY2023. At the IPO price of RM1.29 per share, Cuckoo International would have a market capitalisation of RM1.85 billion.

Upon listing, the company will be valued at about 21 times its earnings per share of 6.1 sen in the financial year ended Dec 31, 2023 (FY2023).

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