For those who have recently added new home furnishings in preparation for the upcoming Lunar New Year, the “Lorenzo” brand name should somewhat ring a bell. After all, it has been a well-established and prominent label on the local furniture scene throughout these years – winning the Singapore Promising Brand Award for three consecutive years since 2003.

The company behind this trademark is Singapore-listed Lorenzo International (Lorenzo), an integrated lifestyle furniture group. Under the astute stewardship of executive chairman, James Goh, Lorenzo is primarily engaged in the design, manufacture, assembly, wholesale and retail of conceptualised lifestyle furniture. Its products are categorised into two collections, namely DANTE – the classic leather collection, and ENZO – the wood-based collection.

Listed in May 2006 on the former Sesdaq, which has been replaced by Catalist, a sponsor- supervised listing platform, Lorenzo was upgraded to the Mainboard in January this year, marking another significant milestone for the company since its establishment in 1983. “Without a doubt, this (Mainboard upgrade) will enhance our profile and expose the company to a broader stream of investors and institutions,” commented Goh during an exclusive interview with Shares Investment.

EXTENSIVE RETAIL NETWORK

Targeting the mid- to high-end market segments, Lorenzo sells its products through 36 whollyowned retail stores in Singapore, Malaysia, Taiwan, Australia and the PRC as well as 33 Licensed Retailing Systems (LRS) stores in Malaysia, China, Brunei and Myanmar. The company also exports its products to more than 50 countries around the globe, particularly those in the Asia Pacific and Oceania regions. “Fortunately, we do not have any exposure to the US market,” quipped Goh, in view of the sub-prime problems plaguing the world’s largest economy.

In addition, Lorenzo acts as an original design manufacturer to design and manufacture leather sofas under its customers’ own brands, and as an original equipment manufacturer to manufacture furniture based on its customers’ designs.

Frequently participating in international trade fairs and exhibitions, Lorenzo is ably supported by two leather sofa manufacturing facilities in Malaysia and Kunshan, PRC, and a woodbased furniture manufacturing facility in Kunshan.In order to cope with the rising demand for its products, the company is in the midst of constructing a third production facility in Kunshan, which is estimated to complete in the third quarter of this year and raise the production capacity of wood-based furniture by a minimum of 30-40%.

Earlier, Lorenzo placed out 20m new shares at $0.26 apiece to financial institutions, high networth individuals and strategic investors, raising approximately $5m. Of which, $3.5m was earmarked to fund the aforesaid development.

NEW MARKETS, NEW PRODUCTS

Last October, Lorenzo extended its geographical reach by launching its first self-owned store measuring 536 square metres in Australia, which is situated in the prime furniture retail strip of Richmond, inner city Melbourne. Notably, the new store introduces a new collection of wooden lifestyle furniture of QIAO, which is designed with an ethnic influence. Around the same period, Lorenzo also enlarged its China presence with its first selfowned retail store in Shanghai. “We are planning to open more self-owned retail stores,” Goh revealed.

Furthermore, Lorenzo is looking at improving its LRS by adopting the franchising methodology in a bid to cater to increasing demand in existing markets. The management indicated that once implemented, the enhanced system will allow the company to collect royalty fees and joining fees from franchisees and give the company additional flexibility to penetrate new markets.

Apart from its retail network expansion initiatives, Lorenzo has also been busy introducing new and innovative lifestyle products to its customers. One such product is the new bedroom/bed linen series, which comprise beds and bedding products such as bed sheets, pillows/covers, quilts/covers and accessories.

SPARKLING 1H07

For the six months ended 30 June 2007, Lorenzo almost equaled its bottom-line for the whole of FY06 by chalking up net earnings of $2.23m, a 68% surge from the previous corresponding period. According to the management, this achievement was attributable to a 24.8% increase in revenue, which was driven by the booming housing markets in the region, better control of operating costs and benefits from economies of scale.

Analysing the revenue breakdown, Lorenzo’s LRS business segment registered the highest growth of 99.8%, while the company’s retail segment was a distant second, posting a 34.8% rise in turnover. Coming in third was its export segment, which improved a marginal 6.1%.

Predominantly due to its relatively smaller public float, Lorenzo wasn’t very much affected by the global rout that occurred on 21 and 22 January 2008. Based on its closing price of $0.25 as at the time of writing, the company was trading at 13x FY06 P/E and 1.3x FY06 P/B. Taking into account the strategic initiatives that are in place to sustain the company’s top- and bottom-line growths, these numbers appear destined to improve. Meanwhile, shareholders must surely be hoping that its share price will also move in tandem.