The Taiwanese love to sing. Banking on this fact, two major financial holding companies have jointly invested NT$300 million in Cash Box KTV (
The deal was the final stage of Cash Box's plan to increase capital from NT$1.1 billion to NT$1.5 billion, Hung Mei-lan (
Cash Box is the country's second-largest KTV chain with some 20 outlets nationwide.
Cathay Financial Holding Co (
Cash Box is expected to be listed on the TAIEX late this year or early next year.
Earlier this week Cathay spent NT$150 million to acquire a 2.5 percent stake in Cash Box, according to Cathay's executive vice president Lee Chang-ken (
The purchase gives Cathay a 3.3 percent share in the KTV giant.
Late last week rival Fubon also spent NT$150 million to gain a 2.5 percent share in Cash Box, Fubon deputy manager Jung Yi-chiang (
Market analysts said investment in the cash cow should prove profitable.
"The KTV sector has been making money for years ? the investment return is quite enjoyable," said Edward Jeng (
Over the last four years, the 60-KTV-outlet Holiday Entertainment Co (
Cash Box is expected to top that showing with NT$4 earnings per share this year, he added.
Financial holding companies are attracted to the fact that the KTV industry operates on a cash basis.
The nation's only listed KTV is Holiday, a company known for paying its year-end dividends in cash, said Wen Tuan-lien (
Meanwhile, Cash Box said the capital it has raised will be mainly used for overseas expansion.
"The company is considering opening up more new parlors in China within the next few years," Hung said.
The nearly saturated local-KTV market is forcing Cash Box to expand abroad for sales growth.
"The local KTV market has stop expanding and had even encountered negative growth," Jeng said.
Holiday sales fell 7.8 percent last year, year-on-year, while growth was 26 percent between 1999 and 2000, he added.
Cash Box has already set up four outlets in China -- three in Shanghai and one in Beijing.
In early January, Cash Box spent NT$325 million to acquire a 31.9 percent stake in rival Holiday.
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