But analysts say it will have minimal impact on earnings

KUALA LUMPUR: The right to use the "Porsche Design" brand will have minimal revenue impact on Pelikan International Corp although the stationery maker¡¯s image will be enhanced, analysts said.

Pelikan has secured a five-year right to manufacture and distribute writing intruments under the Porsche Design brand in the worldwide market, commencing Jan 1, 2011.

On Dec 30, the company entered into a manufacturing and distribution licence agreement with Porsche Lizenz- und Handelsgesellschaft mbH & Co.KG, Germany, for the use of the Porsche Design trademark for writing instruments.

Porsche Design is a luxury brand founded in 1972, with a product portfolio which includes men¡¯s accessories such as fragrance.

Porsche Design is a luxury brand founded in 1972, with a product portfolio which includes men's accessories such as fragrance.

Analysts noted that the Porsche Design brand catered to a niche market, which would mean the impact on earnings would not be very significant.

"Despite the tough operating environment in the previous year and fewer licenses issued, Porsche Design Group¡¯s revenue continued to grow, albeit minimally, to 63.5mil euros in its financial year 2009 (FY09) from 63.3mil euros in FY08 on opening of new franchise retail outlets," OSK Research said in its report.

"As the manufacturing and distribution of Porsche Design writing instruments will only commence in 2011, we are maintaining our FY09 and FY10 earnings forecasts at RM44.7mil and RM110.2mil respectively. Our target price is hence maintained at RM2.57. The ex-date of the group¡¯s rights issue is fixed for Jan 6, 2010. Our ex-rights target price is RM1.71," it added.

ECM Libra Investment Research noted that "there is a lack of details in the announcement made other than the company stating that the addition of Porsche Design brand expands Pelikan¡¯s fine writing instruments¡¯ product range and provides an ideal fit to capture different market needs."

ECM Libra is maintaining its "buy" call on Pelikan, with a cum-rights target price of RM3.13.

Pelikan Group head of production and research and development as well as executive vice president Thorsten Lifka told StarBiz in a teleconference from his office in Switzerland that "Pelikan is looking to have a turnover of 20mil euros from the Porsche Design range over the 5-year period."

"Pelikan's contract with Porsche is not limited to the five years, and the company is looking to extend the contract," he added.

When asked about the possibility of more tie-ups in the future, Lifka said "it is difficult to predict any tie-ups in the near future" and that "Pelikan is trying to co-exist their range to cater to different markets."

Faber-Castell AG of Germany was the previous exclusive manufacturer and distributor of Porsche writing tools