Bonia  announced  yesterday  that  its  wholly-owned  subsidiary,  Active World  Pte  Ltd  (AWPL),  has  entered  into  a  JV  agreement  (JVA)  with Bruno  Magli  SPA  (BM)  to  set  up  a  company  called  Bruno  Magli  South East Asia Pte Ltd (BMSEA) under the Singapore Companies Act, for the purpose  of  sale  and  marketing  of  BM's  products  under  Bruno  Magli brand in Singapore, Malaysia, Indonesian, the Philippines, Vietnam and Thailand. 

- Bruno  Magli  in  the  bag.  BM  is  an  Italian  shoemaker  that  designs  and handcrafts  high-quality  luxury  shoes  and  accessories  under  the  brand Bruno  Magli.  The  issued  and  paid-up  capital  of  BMSEA  is  SGD10, divided  into  10  ordinary  shares  of  SGD1  each,  and  belongs  to  AWPL and BM at a 7:3 ratio. BMSEA’s capital will eventually be increased from SGD10  to  USD300k  by  way  of  subscription  to  new  ordinary  shares  in cash, in the agreed equity percentage.  

- Franchise  agreement  inked.  Pursuant  to  the  JVA,  BM  and  BMSEA signed  a  franchise  agreement  to  grant  BMSEA  the  right  and  license  to use the trade name Bruno Magli. Nonetheless, the e-commerce activities under the brand name worldwide will be within BM’s purview.

- Maintain BUY. We view the deal positively for Bonia in the longer-term as the JV is a strategic alliance to bring in and market the luxury brand in the  Asean  countries.  After  acquiring  Braun  Buffel  in  late  2010,  Bonia  is moving  further  into  the  high-end  market  via  the  latest  collaboration.  As there  is  no  financial  impact  on  the  Group  for  the  time  being,  our  FV  is 
unchanged at MYR2.42, based on 11x FY13 EPS. We maintain our BUY recommendation.

Source: RHB