Feature DEGEM 7119

Feature
DEGEM
7119
Degem Bhd
Main
Consumer Products
www.degembhd.com
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The pride of Diamond & Platinum is its signature Estrella® Diamond,
where eight perfectly symmetrical and identical hearts and arrows
are in perfect symmetry and alignment of its facets. All 57 facets are so
indentical and exact in size and alignment that it produces an extraordinary
evenness of light returned to the eye.
Branding of DeGem
A strong brand is invaluable as the battle for customers intensifies day by day. Therefore it
becomes important for business owners to invest in research, define clear goals and brand
build. DeGem Bhd believes strongly in brand building and continues to do so despite being
in business for over 30 years.
DeGem, founded in the early 1980s as a traditional family business has today the most
diverse portfolio of rare and precious jewels. As a respected jeweller with one of the
largest collection of diamonds and gemstones in Malaysia, DeGem recognises
the importance of strong branding in the industry and is constantly dedicated
to nurturing its retail brands.
DeGem’s jewellery products are marketed under the DeGem, and Diamond
& Platinum brands. The DeGem brand caters for the mid- to high-end segment of the consumer market, where high brand value and loyalty is greatly
emphasised.
Diamond & Platinum is the market leader of contemporary jewellery in platinum and white gold, tailored for the young and trendy consumers. Diamond
& Platinum offers its consumers a choice of high quality diamond and gemstone
jewellery at affordable prices. The pride of Diamond & Platinum is its signature
Estrella® Diamond, where eight perfectly symmetrical and identical hearts
and arrows are in perfect symmetry and alignment of its facets.
DeGem designs and manufactures its own jewellery, and markets it
domestically and overseas through its own retail outlets, and sells
wholesale via its design and distribution unit in Hong Kong.
DeGem has invested its vast experience in developing two household brands, Infinity and Soleluna. While Infinity is highly sought
after by couples for their engagement and wedding keepsake, Soleluna fulfils demand from a niche market looking for big and bold,
yet affordable, jewellery for the working class. DeGem is also the sole
distributor of the renowned Lazare Diamond® in Malaysia.
Who are we?
DeGem Bhd was incorporated on January 1997 as a private limited company and was
converted into a public limited company on March 1997. The company
was listed on the Second Board of the Kuala Lumpur Stock Exchange (now Bursa Malaysia) in October 2001. In June
2003, DeGem’s listing status was transferred to the
Main Board of the exchange upon completion
of a bonus issue of 1-for-2, increasing its
issued and paid-up capital to RM60 million.
DeGem prides itself on its diverse
portfolio of rare and precious jewels, sourced from cutters around the
world with whom DeGem has excellent relationships, ensuring that only
quality jewels are added to DeGem’s
inventory.
Paul Choong, DeGem executive director
told Public Listed in an interview that the company is well known for its design and delicate craft,
and its ability to marry the beauty of precious gems with avant
garde jewellery designs.
The company’s range of exclusive and unique creations can satisfy the most discerning clients
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Feature
The company’s range of exclusive and unique creations can satisfy
the most discerning clients when it comes to high-end jewellery. In
fact, DeGem has regular customers from near and far, Choong said.
Choong said the skill of DeGem’s craftsmen is the foundation of its
consistency in being elegant, aesthetic and having a unique production.
“To this end, DeGem places great emphasis in technical training for
its production team. We are keeping our fingers on the pulse of
the latest technological advancements and techniques employed in
product quality improvement. This ensures we bring out the best in
every product that we design and manufacture,” he said.
DeGem, with a market capitalisation of approximately RM135 million as at end October 2010 is focused on two strategies - vertical
integration to generate above average margin, and diversifying income sources via regional expansion. Choong said DeGem’s operations are vertically integrated, right from sourcing, designing and
manufacturing to the distribution of its products.
Choong said the integration is vital to the preservation of the quality
of its products, which in turn helps retain the loyalty of its customers. He said such integration is also cost effective in ensuring not
only sustainable profit margins for the Group but competitive pricing for its customers.
Focus on fine jewellery
DeGem’s focus is on the diamond and gemstone
fine jewellery segment, which provide better profit
margins than gold products. Choong believes that
although demand for fine jewellery may be
susceptible to the volatility in economic
conditions, rising affluence enhances consumer optimism and buying sentiment.
“More people understand the concept
and investment value of jewellery. Previously, people buy gold as an investment but the landscape has changed
today. There is strong fundamental demand for diamonds
and
platinum
jewellery,”
Choong said.
DeGem has a maximum
production capacity of
3,000 units a month. Four
characteristics known as
the “4 Cs” are commonly
used as the basic descriptors of
the diamonds and gemstones carat, cut, colour and clarity.
“Carat, colour and clarity comes
naturally. The only human factor
is the cut. The cut determines the
sparkles. The carat is the weight,
which determines the price. It is
the 4 Cs that make expensive
jewellery especially diamonds
so precious,” Choong explained.
“More people understand the concept and investment value
of jewellery. Previously, people buy gold as an investment but
the landscape has changed today. There is strong fundamental
demand for diamonds and platinum jewellery,”
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Design, Distribution and Retail
Market Resilience
With understanding of Asian customers’ preferences for diamonds
and gemstones jewellery, DeGem has strategically positioned itself
for direct regional expansion into Singapore, Indonesia, Brunei and
Hong Kong, while strengthening its foothold in Malaysia.
Despite the global economic downturn affecting the first half of the
financial year 2009, DeGem achieved satisfactory results for the full
year as people continued to buy jewellery for important occasions.
The company posted lower revenues of RM189.4 million, a marginal decrease of 9.5 per cent from RM209.2 million in 2008.
The company currently has five boutiques at exclusive retail addresses within the Klang Valley, two in Singapore, and one in Jakarta, Indonesia. DeGem expanded its operations in Singapore in 2010 with
the opening of its second brand boutique at The Shoppes at Marina
Bay Sands integrated resort.
DeGem’s design and distribution centre is based in Hong Kong,
which is the hub of the international jewellery business. From this
strategic base, DeGem supplies to retailers in Europe, Asia Pacific,
the Middle East and Southeast Asia, contributing significantly to its
overseas revenue.
Choong said market demand patterns from the design and distribution unit allows the company to keep abreast of changes in consumer preferences and trends in the jewellery industry.
In line with its long term plan to become an acclaimed regional
jeweller, DeGem regularly organizes and participates in events such
as fashion shows, exhibitions and road shows to showcase its jewellery and promote better awareness and appreciation of its products.
*
Profit before taxation was, however, higher at RM22.2 million in
2009 compared to RM20.0 million in the previous year, an increase
of 10.7 per cent year-on-year,
DeGem registered a higher net profit attributable to shareholders
of RM15.4 million in 2009 against RM14 million in 2008, which
translated into earnings per share of 11.47 sen against 10.45 sen.
Its shareholders’ fund strengthened increased by 9.4 per cent to
RM144.7 million.
Net assets per share increased further to RM1.11 per share from
RM1.00 per share, a consistent improvement for the past 3 years.
The total debt to equity ratio remained at a healthy level, fairly close
to the previous financial year end of 0.23 times.
Choong is upbeat on the industry saying that it will continue to
grow as more people come to appreciate the value for diamonds.
DeGem is building its overseas markets to garner new customers.
He said the demand for basic jewellery item has so far remained
resilient. “We see improved market sentiment and strong demand
for fine jewellery,” he said.
*
* Forecast by Mercury Securities Sdn Bhd
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Feature
Corporate Milestone
May
P.Y.T Jewel &
Time Sdn Bhd,
a wholly-owned
subsidiary of
DeGem and its
subsidiaries,
disposed showrooms located at
Petaling Jaya and
Subang Jaya, Selangor, together
with certain
inventories and
fixed assets
BERHAD
Aug
DeGem acquired
100% equity
interest of Rancak
Riang Sdn. Bhd.
Sep
Rancak Riang
Sdn Bhd acquired
100% equity
interest of Grandmax Corporation
Limited (“GCL”),
Hong Kong. The
primary business
of GCL shall be to
create and design
new range of jewellery especially
for the overseas
market. GCL
shall develop new
markets for the
Degem through
the establishment
of distribution
network targeting
consumers in
the Middle East,
United States and
Europe.
Mar
DeGem completed bonus issue of
21.0 million new
ordinary shares
of RM1.00 each
on the basis of 1
for 2.
Jun
Transfer of
DeGem’s listing
from the second
board to the main
board of KLSE.
Sep
Rancak Riang
Sdn Bhd acquired
100% equity interest in Fareway
International Ltd
(“FIL”), Hong
Kong. FIL is
involved in the
manufacturing
of jewellery. FIL
shall complement
and enhance
the efficiency of
Degem’s current
manufacturing
operation in
Malaysia through
lower cost of
production. FIL
shall produce the
low to mid price
jewellery range
and for Grandmax Corporation
Ltd.
Nov
DeGem set up
Diamond &
Platinum (B) Sdn
Bhd (D&P), 80%
owned by DeGem
to penetrate the
market in Brunei
Darussalam
Nov
Oct
DeGem’s listing
on the second
board of KLSE.
Dec
DeGem acquired
80% shareholding
in Titanpuri Sdn
Bhd.
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Diamond &
Platinum Sdn
Bhd subscribed
99.99% shareholding in Venus
Diamond Sdn
Bhd to enable another outlet to be
operated under
the D&P chain
Dec
DeGem re-organised Diamond
& Platinum (B)
Sdn Bhd to be
operated under
Diamond & Platinum Sdn Bhd.
May
Diamond &
Platinum Sdn
Bhd, 60% owned
by DeGem, acquired remaining
shareholding of
D&P2 Jewellery
Sdn Bhd.
Sep
Aug
DeGem completed subdivision
of ordinary shares
of RM1.00 each
in DeGem into
ordinary shares
of RM0.50 each
(“Share Split”).
Mar
DeGem acquired
remaining 40%
equity interest of
Diamond & Platinum Sdn Bhd.
Inticraft Sdn Bhd,
wholly-owned subsidiary of DeGem,
acquired 70.0%
equity interest
of Solireno Sdn
Bhd which is
involved in the
manufacturing
and trading in
gold jewellery.
Oct
Jewelmart International Sdn Bhd
invested HK$6.39
million in Grandmax Corporation
Ltd (“GCL”) by
subscribing additional shares in
GCL. The funds
would enable
GCL to have
funds to develop
new markets
for the Degem
Group through
the establishment
of distribution
network targeting
consumers in
the Middle East,
United States and
Europe.
Apr
DeGem’s whollyowned subsidiary,
Jewelmart International Sdn.
Bhd, acquired
two (2) Ordinary
Shares of SGD1
each representing
100% equity
interest in Degem
Prestige Pte Ltd
for the purpose
of trading in
diamond and
jewellery in
Singapore.
May
Nov
Jewelmart
International Sdn
Bhd acquired 60
per cent equity
interest in Meca
Jewellery Ltd
(“MECA”) as part
of the Group’s
expansion
programme to
penetrate in
the European
jewellery retail
business.
Feb
Diamond & Platinum Sdn Bhd
set up Diamond
& Platinum Pte
Ltd in Singapore
to expand its
products to
wider range of
customers.
Jan
Jewelmart
International Sdn
Bhd set up Jewel2Cash Pte Ltd,
in Singapore to
venture into pawn
broking business
in Singapore.
DeGem Group
embarked on a
share buyback
programme since
20 November 2009 to
actively manage
its capital. A total
of 1,527,100 ordinary shares have
been bought from
the open market
to improve its
earnings per
share and return
on equity.