"Scenic in Name, Beauty in Frame" is the trademark quote of Classic Scenic Berhad, a local unnoticed leader in the making of wooden picture frame mouldings. After reading its annual reports and financial numbers, I came to realize that this company could be a potential gem in Bursa. Hence, I made up my mind to visit the company's plant located in Rawang.
Kim, the Financial Controller of Classic Scenic, greeted me upon my arrival at the office. Simon, the executive director joined us in the discussion. I must admit that this is one of the best investor relations experience I've ever had as Kim answered all my questions with patience. I am indebted to Kim for the thorough explanations on how this industry works and the full business model of the company.
Let's see what I've learned from this site visit.
#1, 6 Major Products
Classic Scenic's wide range of product offerings can be segmented into 6 main groups - wood stained, matt colour, decorative gilding, gloss lacquer, laminated veneer and wash & distressed.
#2, Market Share
The company has achieved 37% of Malaysia's total exports for finished moulding as at 31 December 2015 being the highest market share in Malaysia. The remaining 63% is shared among 10 other players. The management's statistics show that Classic Scenic has approximately 5.5% of global exported market share for finished moulding.
#3, Country concentration
It exports about 77% to USA, 3% to Canada, 9% to Australia, 5% to Europe and 5% to Asia.
#4, Top 3 Customers
Michael Stores, Inc. is the largest retailer of arts & crafts materials in the United States, with 1,313 stores spanning across the North America. Hobby Lobby, Inc. with about 700 stores in the USA. Most importantly, Larson Juhl, a Berkshire Hathaway's company, is also one of the big customer of Classic Scenic.
#5, Incentivized Cost Savings
Every year, the company sets a target for cost savings and if the employees could outperform the target, the extra cost savings will be distributed as a form of rewards based on individual's performance appraisal. Brilliant!
#6, Moving upstream
The company has plans to venture into saw milling to save costs. Since the current sawn timbers are purchased from their suppliers, the off-cut parts have already factored into the price of each sawn timber.
Classic Scenic Berhad operates in a niche market. The management has placed a lot of attention in its product quality so as to achieve higher margins as compared to its peers. Besides, the company's low-cost awareness has protected its profit margin. I walked away feeling impressed with the company and its management.
CSCENIC (7202) - 6 Things I Learned From Classic Scenic's Visit