We see a lot of beauty and skin care saloon and spa centre in Malaysia.
However, among all the group operate in this industry only one company in listed on Bursa Malaysia.
Esthetics International Group Bhd, the only public listed skin care and spa centre in Malaysia, had made a public issue of 23.34 million shares and an offer for sale of 6.66 million shares, at 75 sen for each of the 50 sen par value shares when listing the ompany on the stock exhange few years ago.
The flotation of EIG will raise RM17.5mil. The company plans to use RM2.5mil of the proceeds to establish six new professional skincare centres, RM1mil to refurbish existing outlets, and RM1.5mil for investment in information technology facilities.
The construction of its corporate office and warehouse in Shah Alam will take up another RM2.5mil, and RM2mil will be allocated for additional working capital.
EJG, which is involved in professional skin care and wellness services as well as distribution of skin care and wellness products, secured the first exclusive distributorship for Dermalogica’s range of professional skin care products in Malaysia in 1989.
The contract also allowed it to use the Leonard Drake trademark for its service centres.
Esthetics operates Leonard Drake professional skin care and spa centres, and Belle Lina. Belle Lina was a home-grown concept store which uses the same products as its Leonard Drake stores.
Its executive chairman Lim Yee Soon said the company held exclusive distribution rights for Dermalogica Skin Care (USA) and Eve Taylor Essential Oils (UK) products in eight countries — Malaysia, Brunei, Singapore, Philippines, Vietnam, Indonesia, Hong Kong and Thailand.
AmResearch said the company, which received the authorities’ approval for own franchise (Belle Lina) scheme last year, was likely to kick off the programme early in the second quarter of 2006.
The company expects to have seven franchise centres next year and to increase this to 13 in 2007, and 19 in 2008. It plans to introduce the Belle Lina franchise to Singapore, Hong Kong and Thailand while for Vietnam, Indonesia and the Philippines, master franchisors will be appointed.
Plans were also under way to establish at least three new corporate-owned centres in the KLCC shopping centre, Shah Alam city centre and Lot 10 shopping mall respectively, for RM2mil, it added.
EIG subsidiary EIG Pharma Asia Pacific Sdn Bhd had secured the rights to market and distribute US-based Vitogen Inc's products under EIG’s own brand name in Southeast Asia and Korea.
As at end-March, there are 16 professional skin care centres and two kiosks located in prominent shopping centres. The company also has 300 appointed local dealers, who independently own the skin care centres, according to the research house.
It distributes the US-based Dermalogica
range of skincare cosmetics, which contributes 80% of its revenue while the remaining 20% is derived from its own brand of cosmetic products. In its first quarter ended April 30, 2005, EIG’s revenue was RM19 million.EIG currently exports to Southeast Asia and Hong Kong, with about 26% of revenue derived from exports alone. EIG wants this to increase to 35% by the end of the financial year.
“We do plan to go into China as we have operations in Hong Kong with over 30 staff. While we want to use this to venture into China, we are worried about counterfeits,” said Chan, EIG chief financial officer.
The company recently acquired a RM12 million office and warehouse space in Bukit Raja, Klang to consolidate operations.
Meanwhile, its founder and executive director Melissa M Chen said the “youth obsession” culture, especially among baby boomers, was looking for alternative solutions to combat ageing.
Hence, this is the target market for its recently launched “Radiancy” products which use “healing light” therapy instead of intrusive therapies such as botox.
The company, which launched the Radiancy beauty system in April, had to-date achieved over RM1mil in sales for this beauty equipment, he said.
To broaden the revenue base, the company is likely to venture into the middle-income and mass retail market segments. “We will also be launching our new in-house brand Clinelle, a skincare range with emphasis on botanical extracts to tap the mass market within the next few months,” he said. Clinelle products are already available at major pharmacies such as Guardian, Vital Care and Watsons.
Lim said the widening of its product range through its in-house brands to cater mainly to medium- and low-income segments of the market was a key strategy.
Since 2001, Esthetics had introduced four in-house brands – the Averine range of cosmetics, Efislim range of slimming products, Bioxil for whitening and firming essence and Clinelle cosmeceutical products.
Meanwhile, professional services contribute about 40% to turnover, and the remainder from the sale of products. For the financial year ended Jan 31, the company posted a higher pre-tax profit of RM17.7mil compared with RM16mil a year earlier. Sales also rose to RM80.7mil from RM62.6mil previously.
Esthetics opened its first mobile Dermalogica Consultation Centre (DCC) at the Bukit Raja Shopping Centre in Klang recently.
Lim Yee Soon“We are optimistic about our prospects and target to open 10 more DCCs within the next 12 months,” Lim said, adding that each centre would cost less than RM100,000.
He described these mobile skincare centres as an attempt to make Dermalogica products more accessible to existing and new customers. Currently, Dermalogica is only available at all Leonard Drake, Belle Lina and selected skincare salons nationwide.
Esthetics now has 24 professional skincare centres and two kiosks in prominent shopping centres. The company also has 300 local dealers who independently own skincare centres.
Esthetics also expects to refurbish 12 of its existing Leonard Drake centres at an estimated cost of RM1mil.
On its investment risks, AmResearch said Esthetics' domestic skin care industry was fragmented, with many players in each of the mass market, premium brands and professional skin care segments.
Nevertheless, it added, Esthetics had thrived, and its strong balance sheet showed a net cash of RM32.9mil as at Jan 31.
“Given its planned capital expenditure of RM7mil for the financial year ending 2006, we foresee the group remaining in a net cash position by end-January 2006,” it said.
