We are pleased to publish KTMG Limited’s (“KTMG”) annual report for the financial year ended 31 December 2018 (“Annual Report”) following the completion of the reverse takeover on 18 February 2019. KTMG is an established apparel contract manufacturer specialising in nightwear, lounge wear, casual wear and plus sized apparel for all ages. In 1988, KTMG was founded as a small shop lot production and has since grown to become a public-listed company with more than 30 years of experience in apparel manufacturing. Today, we have a total of 39 production lines in 4 facilities in Batu Pahat, Johor, Malaysia and Phnom Penh, Cambodia.
Throughout the years, we have established strong consumer relationships. Some relationships, such as that with Matalan Retail Limited of the United Kingdom (“UK”), have lasted for more than 25 years. This is due to our “Co-Creation Business Model”, which allows the firm to address to consumers’ needs and adds value by collaborating closely with consumers on the product initiation process. This enables the Group to provide the consumers with the right product at the right time at the right costs, making us proud suppliers to our consumers in Europe, the United States of America and the UK.
Year In Review
KTMG’s goal in the long-run is to become an important player in the global economy. In working towards this goal, we have achieved tremendous growth, earning a revenue of RM218 million for the financial year ended 31 December 2017 (“FY2017”), with a compounded annual growth rate of 24.7% since 2015 as disclosed in the Circular dated 21 December 2018. On 29 September 2017, Lereno Bio-Chem Ltd. announced that it had entered into an option agreement with Knit Textile and Apparel Pte Ltd (“KTA”) to acquire 100% of the issued ordinary shares in the capital of KTA. The exercise was approved by the Singapore Exchange Securities Trading Limited (the “SGX-ST”) on 22 December 2018 and completed on 18 February 2019.
We have chosen to list on the Catalist Board of the SGX-ST due to Singapore’s excellent reputation as a global financial hub with attractive infrastructure for financial services. Through this listing, we hope to reach out to international business partners as well as investors to empower us in our next phase of growth.
We will continue to foster long-term relationships with our existing consumers, including Matalan Retail Limited and Bluestem Brands, Inc., with the intention to streamline their number of suppliers and focus on growing their business relations with a few major suppliers.
KTMG also intends to shift our focus to niche market segments such as seniors and plus-sized consumers. Statistics from the US Census Bureaus has shown that in 2000, the number of residents aged 65 and above is 35.0 million and in 2017 the number increased to 50.9 million. It is expected to increase from 49.2 million in 2016 to around 94.7 million in 2060. Hence, by emphasising on these market segments, KTMG will potentially have access to a larger consumer market. Please refer to Circular dated 21 December 2018 for more information.
Additionally, KTMG intends to set up sales and marketing offices in Hong Kong, and eventually, other major cities such as New York. There are also plans to extend our customer base to Australia. This would enable the Group to optimise production capacity and increase sales during its non-peak months of January to April, as currently, most of the Group’s consumers are from the northern hemisphere.
KTMG will also continue to strive to improve its operational efficiencies through greater automation of production capabilities, upgrading of existing equipments and through the purchasing of new equipment and machinery, and increasing production staff at its existing manufacturing facilities.
Furthermore, KTMG is constantly exploring options to expand its operations by setting up new manufacturing facilities in countries with low production and labour costs, including Vietnam and Myanmar.
Traditionally, US apparel companies have sourced for manufacturers in China. However, as China economy develops, labour costs increase, causing apparel companies to shift their manufacturing operations to other countries such as Vietnam, Cambodia and Malaysia. Malaysian apparel manufacturers are widely reputed as providers of high-quality products, and also capable of timely and reliable services. We are confident that we are a sizeable and reputable manufacturer with strong production and management capabilities, able to meet consumers’ quality specifications and stringent requirements. We believe that we are the competitive manufacturer best suited to meet the need of clients in this changing economy.
Co-Creation Business Model
The Group’s Co-Creation Business Model allows the Group to collaborate closely with consumers to enhance product designs and functionalities. The Group believes that its Co-Creation Business Model is its key competitive strength allowing it to translate design concepts into successful products to serve our customers’ needs. This business model will, in turn, increase our competitive ability in the fast-moving regional and international business environment.
KTMG has invested approximately RM32.0 million in Knit Textiles Integrated Industries Sdn. Bhd. (“KTII”) to expand into fabric knitting, dyeing, finishing, and printing operations to allow the Group to have better control over the supply and quality of raw materials. KTII's dyeing and finishing capacity will achieve 150,000 kg per month by December 2019 and 200,000 kg per month by December 2022. KTII will also set up a chemical laboratory to conduct research and development into areas such as the development of new techniques and processes, as well as new value-added functionalities for fabrics. By expanding upstream, KTMG will develop into a vertical contract manufacturer that is competitive in the international sourcing market.
Note of Appreciation
On behalf of KTMG, I wish to thank the SGX-ST and all professional firms involved in the proposed acquisition of KTM for their invaluable support.
I would also like to thank my business partners for their partnership over the past 40 years because their faith in my vision has enabled me to lead KTM, and from now on, KTMG, from a small shop lot production to a public-listed company in Singapore today.
I am also grateful to our customers who have placed their trust in us and grew with us all these years.
My most heartfelt appreciation goes to my management team and staff for working together with me as a team to realise our dream of taking KTMG beyond the shores of Malaysia.
We look forward to your continuous support as we blossom into an international company.
Mr. Lim Siau Hing