Watch parts maker Nihon Seimitsu issues stock to fund Vietnam, Cambodia ops
HO CHI MINH CITY, NNA – Watch parts and eyeglasses frame maker Nihon Seimitsu Co. will raise cash through a private share placement to finance its operations in Vietnam and Cambodia, as it expects to see a pickup in demand next year.
The Japanese company has factories only in Vietnam and Cambodia while it procures some parts from China.
Nihon Seimitsu said last week that it would allocate 944,000 new shares worth about 100 million yen ($878,000), or 106 yen per share, to a South Korean apparel firm, its largest shareholder.
“We expect the current cycle of inventory buildups and drawdowns by watch makers to ease next year, which will allow us to raise production,” Hideaki Kiriyama, manager of the company’s information management office, told NNA in Tokyo. “At the same time, we want to keep the balance of borrowing from banks at the current level.”
Nhon Seimitsu plans to use about 60% of the new funds for production capacity expansion in Southeast Asia, which has turned out to be costlier than expected, and the rest for repaying bank loans. The recent depreciation of the yen is also making the cost of overseas capital investment more expensive.
In China, an increasing number of closures of metal processing plants means a business opportunity for the Japanese metal parts supplier, which will also require new funding to ensure sufficient capacity in Southeast Asia.