Picture an ad of a slick machine that produces filtered water, hot or cold, by just clicking a button elegantly demonstrated by a Korean Oppa.
That is CUCKOO.
Today, other than water filters, CUCKOO Holdings Co., Ltd manufactures and exports a range of home appliances such as air purifiers, multi-cookers, and kitchen appliances to oversea markets worldwide. In Malaysia, Singapore, & Brunei, CUCKOO International (MAL) Bhd (CUCKOO MY) is currently appointed as the sole importer and distributor of these products.
On 26 March 2025, CUCKOO MY released its IPO Prospectus on Bursa Malaysia and extended an invitation to the public to subscribe its IPO shares at RM 1.29 per share. CUCKOO MY would have a market capitalisation of RM 1.85 billion upon its successful listing.
Source: CUCKOO MY’s IPO Prospectus
Here, I’ll make a list of 8 key things after reading CUCKOO MY’s IPO Prospectus. Of which, you could make a more informed decision on its IPO shares subscription. They are as follows:
1. Products
CUCKOO MY generates 99% of its total revenue from retailing CUCKOO products. The balance of 1% in total revenues was attributable to sales of beauty care, nutrition, and indoor disinfection products under brands such as WonderLab, WonderDewi, and WonderKlean and also provision of IT support and maintenance services. The 1% in total revenue is classified under “Others”.
There are two segments of CUCKOO products: CUCKOO-branded and CUCKOO Co-Created.
CUCKOO-branded has 54 SKUs under its product portfolio, which comprises water filters, home appliances, kitchen appliances and air purifiers. Since 2021, its revenue contribution had dipped from 98.5% to 79.0% on 30 September 2024.
CUCKOO Co-Created has 10 SKUs in its product portfolio. These products are air-conditioners, massage chairs, and mattresses produced in partnership with Fujiaire, Ogawa and LSK. For this segment, revenue contribution increased from 2.9% in 2021 to 20.6% on 30 September 2024.
In this instance, CUCKOO-branded remains as its key revenue contributor in the present while it generates growing sales from its CUCKOO Co-Created products.
Source: CUCKOO MY’s IPO Prospectus
2. Types of Revenue
For both CUCKOO-branded and CUCKOO Co-Created products, CUCKOO MY would generate five different types of revenue as follows:
1. Outright Sales: It refers to customers who pay full price for CUCKOO’s products upfront.
2. Finance Lease Sales: It refers to customers who rent CUCKOO’s products for a fixed monthly installment for a period of 3-7 years depending on its type of products and sales packages. After the completion of their installments, the ownership of products will be transferred to customers.
3. Finance Lease Interest Income: It refers to the return made by CUCKOO MY for providing the finance lease facility to customers renting CUCKOO’s products.
4. Rental Income: It refers to customers, who rent CUCKOO’s products for monthly installments, but had opted not to continue owning these products after completion of these installments. This source of income had ceased beginning in October 2020. Hence, CUCKOO’s rental income had dwindled down since 2021, reflecting its decision to cease offering such contracts to customers.
5. Revenues from maintenance services and sales of spare parts to its customers.
Among them, CUCKOO MY’s revenues were generated substantially from finance lease sales & maintenance and spare part sales. It added margins from finance lease interest income.
Note: Calculated by Adding CUCKOO-branded and CUCKOO Co-Created
3. Profit Margin
In 2021-2023, CUCKOO MY generated RM 1.0-1.2 billion in revenues per annum. In this period, its adjusted net profits have declined from RM 186.4 million in 2021 to RM 100.6 million in 2023. This decline was attributed to a rise in labour costs, marketing costs, and net losses arising from impairment of finance lease and trade receivables during the period.
4. Cash Conversion Cycle
CUCKOO MY has a cash conversion cycle of 312 days. It is attributable to its high level of trade receivables. For the period ended 30 September 2024, its trade receivable turnover is 337 days, which indicates that CUCKOO MY takes around 337 days to collect cash from customers. As for its inventory turnover, it is at 57 days, indicating that CUCKOO MY around two months to sell off its inventories. Meanwhile, its trade payable turnover stands at 82 days, indicating that it took as long as 2-3 months to pay off its suppliers (mainly CUCKOO Holdings Co., Ltd).
Source: CUCKOO MY’s IPO Prospectus
5. Utilisation of IPO Proceeds
CUCKOO MY intends to raise RM 184.8 million in gross proceeds. Of which, it allocates them to the following manner:
1. RM 104.7 million in product purchases to expand its retail business.
2. Repay RM 40.0 million in bank borrowings that charge 4.8% per year in effective interest rate. This would result in an expected interest savings of RM 1.9 million per annum.
3. RM 5.0 million to open 10 CUCKOO “cash and carry” brandshops in the next two years which consist of 1,000 sq. ft. in size per store and would feature CUCKOO’s products. In 2025, it plans to open three brandshops in Kuala Lumpur, Penang and Johor. In 2026, it wishes to open seven brandshops in Selangor, Perak, Kedah, Kelantan, Terengganu, and Sabah.
4. RM 5.6 million in upgrading its IT system, particularly its warehouse management system.
5. RM 10.0 million in expanding its operations in Singapore, which mostly consists of advertising and promotion expenses.
6. RM 19.5 million in estimated listing expenses.
Source: CUCKOO MY’s IPO Prospectus
6. Major Shareholders
Koo Bon Hak shall remain as the biggest shareholder of CUCKOO MY with 11.0% direct interest and 52.0% indirect shareholdings held within CUCKOO Holdings Co., Ltd. Koo Bon Hak shall sit on the board of CUCKOO MY as its Chairman. Hoe Kian Choon is a key shareholder, who holds 10.0% direct shareholdings of CUCKOO MY. Hoe Kian Choon is the CEO of CUCKOO MY.
Source: CUCKOO MY’s IPO Prospectus
7. Dividend Policy
CUCKOO MY targets to pay out at least 20% of net profits to shareholders in dividends.
8. Valuation
At RM 1.29, CUCKOO MY’s IPO shares are valued at P/E Ratio of 18.43, based on adjusted net profits per share in 2023.
Conclusion:
CUCKOO is now a recognisable brand in Malaysia. Its business model would need a substantial amount of cash upfront to finance the purchase of products from its suppliers (mainly, CUCKOO Holdings Co., Ltd) and pay sales commissions. Subsequently, CUCKOO MY is dependent on its customers for prompt payment of their monthly installments for a longer period of time.
It leads to a targeted dividend payout ratio of 20% as CUCKOO MY would need to consider how much it needs in working capital to run its business operations. In 2021-2023, CUCKOO MY has recorded a decline in adjusted profits. Such would be considered alongside with the valuation of its IPO offer and its other listed peers to determine if its shares are to be subscribed. You can study its IPO Prospectus more indepthly and evaluate its pros and cons as an investment to your own stock portfolio. At the end of the day, in investing, what is suitable for one isn’t suitable for another.
IPO Prospectus:
CUCKOO MY Part 1
CUCKOO MY Part 2
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