KUALA LUMPUR: Kumpulan Perangsang Selangor (KPS) is allocating RM24.2 milion to payout 4.5 sen a share to shareholders with the sale of its 50 per cent interest in King Koil mattress license holder, Kaiserkorp Corporation Sdn Bhd.
KPS announced yesterday that it was selling its interest in Kaiserkorp for RM265.5 million to streamline its core business, reduce its debt and generate proceeds to optimise its balance sheet.
The deal to be completed in the first quarter of financial year 2024 is expected to yield a net gain of RM117.4 million for KPS.
Kaiserkorp is the owner of King Koil Licensing, the entity behind the King Koil mattress brand in the US.
The Kaiserkorp group has strengthened its foothold in the bedding industry, with the presence through 24 international licensees in almost 80 countries and achieved an impressive revenue and profit growth compound annual growth rates of 30 per cent and 19 per cent, respectively, for the period between 2018 and 2022.
Public Investment Bank Bhd (PublicInvest) is neutral on the sale of the stake in Kaiserkorp considering it as part of the company's commitment to streamline its operations while still deriving advantages from its remaining 10 per cent ownership in Kaiserkorp.
"Following the transaction, there will be an average earnings gap of approximately 10 per cent in our financial year 2024 and 2025 (FY24-25) projections."This accounts for the remaining 10 per cent profit share from Kaiserkorp and the annual cost savings of RM9.6 million after the divestment," it said in a note.
PublicInvest believes KPS is poised to become a financially robust company, based on the company's financials for the third quarter of financial year 2023 (FY23)."The cash on hand was RM467.5 million, and total debt was approximately RM447.5 million. "With the gross proceeds from the divestment factored in, KPS' cash reserve would surge by over 50 per cent to RM733 million," it added.
PublicInvest had a target price of RM0.78 for KPS.
"The decision to monetise our investment in Kaiserkorp follows a comprehensive review of the group's business, demonstrating its active approach to investment management. It is a strategic move with a few aims in mind, which are streamlining our core business and serving as a catalyst for debt reduction, with the generated proceeds directed towards optimising our balance sheet. This financial manoeuvre is designed to enhance the group's fiscal stability and resilience."
"With the new ownership having vast business exposure and deep sector experience, there would be bigger growth plans for the Kaiserkorp group, helping it thrive stronger for the long term on a higher growth trajectory, whilst creating lasting value for its stakeholders.
Retaining a 10 per cent stake would provide KPS with potential financial upside to its investment whilst maintaining a connection to future growth, potentially yielding additional returns over time," KPS Bhd's managing director/group chief executive officer, Ahmad Fariz Hassan said in a statement.