KUALA LUMPUR: The shareholders of Bonia Corporation Bhd are eyeing substantial growth opportunities amidst an anticipated surge in Malaysia's retail sector this year.
Bonia is proposing to acquire a 30 per cent stake in IT SEA Holdings Sdn Bhd for RM7.5 million.
This transaction is considered a related party deal as Datuk Sri Daniel Chiang Fong Seng, Bonia's group executive director and chief executive officer, reportedly holds a 9.9 per cent stake in ITSH. The 38-year-old is the son of Bonia founder and group executive chairman Chiang Sang Sem,
Market insiders view this acquisition positively, citing complementary businesses between Bonia and ITSH.
They anticipate the Chiang family's intent to expand the business and establish a stronger presence in international markets.
Bonia disclosed to the stock exchange on Tuesday that it had entered into a letter of intent (LOI) with ITSH. The potential deal aims to broaden its product offerings to meet evolving consumer demands in the fashion retail industry.
ITSH's subsidiaries operate in the food and beverage sector with "Bape Café," retailing "Aape" brand fashion products, and distributing "I.T." brand games and toys. Additionally, it holds a 70 per cent stake in the retail sales of "Aape" brand fashion products in Singapore and an associate stake in Infinite 23 Co Ltd, retailing "Aape" brand fashion products in Thailand.
Bonia plans to integrate ITSH's brand portfolio with its existing suite of brands.
With both BAPE and AAPE being globally renowned fashion brands from Japan, the synergy is expected to enhance Bonia's offerings.
The insider suggests that ITSH might utilise the proceeds from the share sale to Bonia to expand its own outlets, a timely move amidst anticipated growth in the retail industry.
Projections by the retailers' association indicate an average growth rate of 7.1 per cent for the Malaysian retail industry in the first quarter of 2024, marking a positive shift after four consecutive quarters of decline across all retail sub-sectors.
Strong domestic demand is anticipated, supported by a robust labour market, stable income growth, increased tourism, and favourable economic policies.
According to Retail Group Asia, department store and supermarket operators anticipate a turnaround with a growth rate of 2.7 per cent for the first quarter of the year, following three quarters of negative growth.
Department store operators project a robust recovery with a growth rate of 21.5 percent, the most optimistic among retail sub-sectors.
Fashion and fashion accessories retailers are also aiming for a strong recovery, targeting a growth rate of 8.8 percent in the first quarter of 2024, according to the report.