Fiamma Holdings Bhd (Fiamma) announced that it has entered into a Memorandum of Understanding (MOU) with Modena Global Limited (Modena) with the intention of entering into a collaboration for (i) Fiamma to import and distribute Modena’s household electrical products in Malaysia and Singapore, and (ii) Modena to manufacture products under original equipment manufacturer (OEM) brand arrangement. We are positive over this development as this enables Fiamma to expand its capabilities to offer more competitive products. Pending further development from this MOU, we keep our estimates unchanged at this juncture. We retain our Neutral call on Fiamma with an unchanged sum of-parts derived target price at RM1.00.

• Modena, a Hong Kong based company manufactures cooling, cooking and cleaning appliances, renewable energy solutions, batteries and mobility solutions. Modena has won multiple awards from international research company GfK since 2010 as the number one consumer choice in the product categories of Built-in Hob, Built-in Oven, Freestanding Cooker and Exhaust Hood, with more than half the market share in Indonesia. 

• Salient terms of the MOU. Under the MOU, both parties will collaborate to facilitate Fiamma to look into importing and distributing Modena’s household electrical products in Malaysia and Singapore. The MOU is also to facilitate Modena to manufacture products under the OEM brand. The MOU shall be valid for twelve (12) months and may be renewed for a further 12 months, but it is not legally binding on the parties until a definitive agreement comes into force.

Source: PublicInvest Research - 7 Jun 2023