Zinus to use proceeds from IPO to capex The mattress maker is planning to build a distribution center in the U.S.

Translated by Kim So-in 공개 2019-10-01 08:00:00

이 기사는 2019년 10월 01일 08:00 더벨 유료페이지에 표출된 기사입니다.

South Korea's mattress and furniture manufacturer, Zinus is planning to use proceeds from its forthcoming initial public offerings (IPO) to construct cutting-edge distribution system. The company appears to speed up the distribution system enhancement as the construction of overseas production system is almost completed.

According to investment banking sources on September 24, Zinus is planning to use at least 70 billion won of proceeds from the IPO to capital expenditures. Estimated net proceeds from this offering will be 173.4 billion won (based on low end of desired range). All of the amount will be used to capital expenditures, except for some amount for the capital structure improvement.

Until August, the company has concentrated on expanding overseas production bases. With the process reaching the final stage, the company is ready to buckle down to the distribution system advancement. Zinus has completed five production factories in China and Indonesia, including acquisition, since 2017.

The mattress maker is operating mainly in the U.S., especially on Amazon, the largest online retailer in the world. The company appears to keep pace with Amazon, which unlocks large-scale investment in its fulfillment network each year. It is said Zinus wants to continue its growth based on positive cooperation relations with Amazon.

The company generates 93 percent of its total revenue from the U.S. market as of the first half of 2019. Of its total revenue, Amazon accounts for 45 percent. It is selling main products, mattresses, less than half of the offline price tag.

"Zinus has push for the large-scale investment to keep pace with Amazon's system innovation and continue to grow and cooperate with the company," said a Zinus official.

The proceeds will likely be used to construct a new distribution center in the U.S. The company is now operating two distribution centers in the country, one in the West and one in the East. However, with current distribution centers, it can ship to mere 75 percent of the U.S. in two days. By building an additional distribution center in the central U.S., Zinus will likely be able to raise the rate to at least 90 percent.

Zinus also is developing new markets via Amazon platforms. It is now selling products through Amazon Australia and Amazon Japan office. "Zinus could enter the Canada, Australia and Japan market easily using Amazon platforms. In collaboration with Amazon, the company is hardening its position in the U.S. market and expanding into overseas market smoothly," said one market watcher.

The mattress manufacturer currently sells about 1400 kinds of products mainly through online channels. According to consolidated financial statements, Zinus recorded 338.5 billion won of accumulated sales as of end of June, up 36 percent compared to the same period last year. Its accumulated operating profit was amounted to 42.2 billion won, up almost 300 percent compared to the same period last year.

Zinus will begin the book-building process on October 16. It will sell more than three million shares on Korea's main bourse KOSPI, and is expected to raise at least 241.7 billion won. NH Securities is the sole underwriter of the deal.

(By reporter JEON KYUNG JIN)
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