Saturday October 31, 2009
Yoong Onn’s best-kept secret and long journey of growth
By LEONG HUNG YEE
NOT many people know that Yoong Onn Corp Bhd, based in Nilai, Negri Sembilan, is behind foreign-sounding home linen brands such as Jean Perry, Novelle, Louis Casa, Diana and Firenze.
Managing director Roland Chew describes this as his family’s best-kept secret.
This is set to come out in the open, now that the company is en route to a listing on Bursa Malaysia. And it has been a long journey.
Yoong Onn was established in 1966 by the late Chew Thee Seng and his brothers, to trade and retail home linen. Then it moved into small-scale manufacturing.
“My late father (Thee Seng) started the business focusing on bed linen but it subsequently evolved to include other home linen. We started producing bath linen, curtains and cushion covers in the 1990s,” Roland tells StarBizWeek.
After more than four decades, Yoong Onn has developed into a full-fledged home linen and bedding accessories provider with about 700 employees.
“We began with a shop in Leboh Pudu near Chinatown and grew with the market. We changed our products from time to time as the market moves forward,” says Roland, adding that the company stills operates the shop today.
The second child in the family, he joined the family business in the early 1980s at the age of 20, together with his brother, Raymond, who was a year younger. Elder brother Eric and another younger brother, Nelson, later joined the duo.
Yoong Onn is currently run by the four brothers, with each overseeing different departments.
Eric, a civil engineer by training, oversaw the building of the company’s present manufacturing facility in Nilai.
Built on a 9.3 plot, the plant can produce up to 1.2 million bedsheets and 950,000 pillow and bolster covers per annum. There is room for expansion as the company is now operating at about 70% capacity.
On the key to Yoong Onn’s success, Raymond says the business always works within its means, just like how the brothers’ late father taught them.
Raymond, an executive director and the group chief operating officer, also believes that the dynamic pricing of the products to suit the market, plays a role as well.
Eric, the head of production, remembers his father as a strict person who forbade his sons from smoking, gambling and drinking.
“He told us to focus on the business and its direction,” he adds.
Roland says bedlinen is like fashion.
“The colours, designs and material changes every season just like fashion,” he explains.
Yoong Onn has obtained approval from the Securities Commission to be listed on Bursa Malaysia’s Main Market in December. The company is expected to raise some RM22mil from the listing exercise.
Roland says the company plans to utilise the proceeds to expand its business.
He adds that its investment bank was still finalising the prospectus and the underwriting is expected to take place next week (Nov 4).
“The bulk of the proceeds will be used to pay bank borrowings, as working capital and for business expansion,” he says.
Roland says the company’s bank borrowings are mostly term loans, stressing that the company has very low gearing and do not rely on overdraft.
For the financial year ended June 30, 2009 (FY09), Yoong Onn posted a net profit of RM13.9mil on revenue of RM130.1mil.
Over the last five years, the company had been registering a compounded annual growth rate of 24.6% in net profit and 17.4% in revenue.
“We have also survived three recessions – in the 1980s, the 1997/98 Asian financial crisis and the current crisis,” Roland says, adding that he was optimistic that there will be further growth in FY10.
“We’re on track to meet our projected sales and we’ve got nine months to go. Our peak season is always during the year-end, Christmas and Chinese New Year.”
Currently, about 75% of Yoong Onn’s sales are derived domestically. Yoong Onn’s products are sold in major department stories nationwide.
The company also operates the Home’s Harmony and Home’s Warehouse chain stores. It opened its flagship Home’s Harmony outlet in the 1 Utama shopping centre in 2004.
Today, the company owns and operates 13 retail outlets in the Klang Valley, Penang and Johor Baru.
It also has a presence overseas, including in Singapore, Taiwan and Vietnam.
“We are working closely to penetrate other markets as well,” says Roland.
On top of that, Yoong Onn also supplies linen products to major hotels such as Mandarin Oriental, Hilton, Ritz-Carlton, JW Marriott, Westin, Renaissance, Parkroyal and Eastin.
On the company’s aspirations, Roland hopes to see a bigger market share both locally and overseas.
“We hope to be stronger and turn into a households name. We want people to tell us they’ve tried our products,” he says.