In "The Big Banks," China International Capital Corporation (CICC): MAN WAH HLDGS acquires an American furniture company to build a long-term supply chain moat in North America

CICC published a report stating that MAN WAH HLDGS (01999.HK) announced last Thursday (18th) that its indirectly wholly-owned subsidiary, MAN WAH U.S. Manufacturing, acquired 100% of Gainline Recline Intermediate Corp. for USD 32 million. At the same time, the company will assume the target group's outstanding bank debt of USD 27.9939 million. After the transaction, MAN WAH Hong Kong Trading granted an interest-free loan of USD 26.6703 million to the acquired target group, with the remaining balance of USD 1.3236 million paid by the acquired target group in cash. The total amount involved in this acquisition is approximately USD 58.7 million.

The report indicated that this acquisition will bring good synergy to the company. The target group covers a distribution network of over 1,000 furniture retailers and two established brands, which is expected to quickly enhance the company's market share in North America. In terms of cost optimization, the company has significant advantages in raw material procurement costs and automation levels, allowing for deep supply chain collaboration with the target group. Additionally, the acquisition directly expands the company's production layout to the United States, which is believed to help better address the challenges and opportunities arising from changes in the international trade environment. The firm is also optimistic that this acquisition will strengthen the company's local competitiveness in the U.S. market.

The firm maintains its profit forecasts for MAN WAH HLDGS for the fiscal years 2026/2027 at HKD 2.124 billion and HKD 2.248 billion, respectively, and keeps the "Outperform Industry" rating and target price of HKD 6.5 unchanged