Multi Sports expects apparels and accessories segment to sprint ahead

PUTRAJAYA: China-based Multi Sports Holdings Ltd expects its apparels and accessories business under the brand name of "Evidoma" to emerge as the largest revenue contributor for the company within the next three years.
At present, the shoe sole segment is still the core division, contributing more than 90% to the company's total top line.
"I believe apparel will outweigh shoe sole, becoming our largest contributor in the future," Multi Sports CEO Lin Liying (pix) told SunBiz in a recent interview.
However, she said, over the near term, the company will still focus more on its shoe sole business to establish a good brand name.
"I foresee good prospects for the apparel segment, but shoe sole is still our core business, therefore we will be more prudent in expanding our apparel business," she noted.
Lin said Multi Sports has no plans to expand the apparels and accessories division beyond China, citing it's not familiar with overseas markets at present.
"The current management team may not be able to cope with the challenges; we'll concentrate on the Chinese market first," she noted.
Multi Sports incurred a net loss of RM6.09 million for the second quarter ended June 30, 2015 against a net profit of RM9.63 million in the previous corresponding period, due to lower sales across all segments.
On this, she stressed that the company's business operations in China are still very strong, with an expectation to maintain the financial performance that it achieved last year.
For the financial year ended Dec 31, 2014 (FY14), Multi Sports posted a net profit of RM32.9 million, a 45.58% jump compared with RM22.6 million a year ago.
"We have gone through different types of volatility and are still in good shape, reflecting the company's strengths. I believe the company will continue to grow on a steady path and there will be limited fluctuation in our earnings. We are hoping to maintain our financial performance," Lin said.
Despite that, she expressed disappointment over the undervaluation of the company shares, which have gone down by nearly 70% in the past one month. Last Friday, it closed down by 6.67% to 70 sen on some 3.24 million shares done.
For Multi Sports, expanding production capacity without proper planning is not a wise strategy in view of the current market scenario.
"This is not a good business strategy for the company; instead, we'll be looking for more good customers and to cooperate with premium brand players, as it will benefit the company more," Lin said.
While it will not directly translate into high margins, she said, securing orders from good profile companies could ensure the sustainability of the company's earnings.
"As they are the big firms, their orders are more consistent. We want to make sure that we are always in a good position despite any market headwinds.
"A company is considered good in China as long as your performance is stable," she added.
Besides supplying to the domestic market, Multi Sports also exports shoe soles for global well-known brands.
Lin said she is optimistic about the market demand for sports shoes and apparels despite the slowing global economy.
On payouts, she explained that the company has not been paying dividends over the past three years due to its prudent cash management in view of the moderation in the Chinese economy.
"It's difficult to get financing in China now, so we've to be prudent in managing our cash and be well prepared for any conditions that could happen," she said, adding that the board has always been considering paying dividends to the shareholders.
Recently, Multi Sports shareholders approved the company's proposed par value reduction exercise to facilitate future fundraising activities involving the issuance of equity and equity-related securities.
Lin said the company is meanwhile on the lookout for merger and acquisition opportunities in China in order to grab a bigger market share.