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This Small, Newly-Listed Share In Singapore Has a Surprising Link to Warren Buffett

IPO

The latest Initial Public Offering in Singapore got its trading debut today. SMJ International (SGX: 40B), which is listed on the Catalist exchange, capped its debut with a stunning performance; its shares closed at S$0.33, up 17.9% from its listing price of S$0.28.

SMJ International is a small carpet distributor with a market capitalisation of just S$21.84 million based on its pre-IPO valuation. And amazingly, it actually has a surprising link with Warren Buffett’s US$313.7 billion conglomerate, Berkshire Hathaway.

In Singapore, SMJ International is actually the sole distributor for the products of Shaw Industries, which is a subsidiary of Berkshire Hathaway. SMJ International has been distributing Shaw’s brand of carpets since 1992 and that activity actually contributes about 30% of SMJ International’s sales.

Meanwhile, the company also distributes its own brand of carpets – the SMJ brand – internationally. Besides Singapore, SMJ International also counts Indonesia, Malaysia and Philippines as its core markets.

The company believes that it has one of Singapore’s largest collections of carpet in stock which is stored in the company’s warehouse in Jurong, Singapore. This gives the company an advantage in terms of variety for customers in addition to being able to deliver its products in timely fashion.

SMJ International managed to raise about S$2.4 million from the IPO. The proceeds from the listing have been planned to be used for expansion purposes, either through acquisitions or through strategic partnerships.

The carpet distributor is optimistic about its future prospects as it sees more commercial real estate projects already being planned in the pipeline in Singapore and those would have carpeting needs. The company’s also looking to expand its geographical reach, with Myanmar being one such possible target.

In any case, there’s one huge basin for growth that SMJ International might never tap, and that’s China. The company does not have a significant presence in the country and it does not intend to expand aggressively there as well. The reason is because competition in China is too large and it would not be worth the company’s efforts to focus on a market with low margins.

Foolish Summary

The reach of Warren Buffett is far and wide. It is quite amazing to see a link between Singapore’s newest IPO and Berkshire Hathaway, one of the largest conglomerates in the world. Judging from its debut, investors are expecting great things from SMJ International.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.