KUALA LUMPUR: Remaining asset light and focused on sales will continue to be Sorento Capital Bhd’s main strategy moving forward post its listing on the ACE Market of Bursa Malaysia.
Executive director Lee Chee Keong said at the moment, the group outsources all its production to third-party manufacturing facilities.
The group is mainly involved in the bathroom and kitchen sanitary ware industry, and is the distributor for third-party brands, including the non-exclusive distributorship of the German brand Bravat and the exclusive distributorship of the Spanish brand Infinity in Malaysia.
According to Lee, most of its manufacturing activity is done in China and the group does not plan to have its own warehouse here.
“Most of the giant companies, they too do not own factories. So we’ve adopted the same successful business model that exists in this era. So I think it will continue to be the success factor for us,” he said.
On the fluctuating prices of materials, Lee said the price of brass has been on the rise globally, but the group’s economy of scale has helped mitigate it so far.
“The impact of the cost to the finished product has revealed the percentage is not that high. Other costs like manufacturing and labour, those impact the cost of products more, so we are managing that. As our group grows in scale, our marketing power is maintained,” Lee said.
He added the rising costs are often reflected in the final retail price as the group needs to be able to sustain their margin.
Lee said the group’s products are varied and they offer water-saving options for both the bathroom and kitchen segment.
He said all Sorento’s products comply with standards set by the National Water Services Commission.
“We plan to provide more green products in the future, so if ever a new policy or tax like the carbon tax is implemented, we will be prepared for it,” he said.
Meanwhile, Sorento closed its maiden trading day up half a sen at 37.5 sen, over its initial public offering price of 37 sen. The shares hit a high of 39 sen and low of 36 sen in intraday trade.
Sorento raised RM57.4mil from the exercise. Lee said more than half of the proceeds will go towards the purchase of inventories, 10% will go towards branding and promotions while another 10% will be used to expand the group’s dealer network.
“For the financial year 2024, we have 664 dealers, and we plan on increasing by another 200 dealers in the next three years throughout Malaysia. We have no immediate plans to expand overseas but should there be an opportunity, we will be open to it,” Lee said.
Lee added the Malaysian market still holds plenty of potential and Sorento will look at ways to increase its participation in other building segments to enhance revenue.
“We will look at residential projects including the affordable housing segment as well hotels and offices.” he said.
