From left: Sik Cheong executive director Wong Hin Loong, managing director Wong Hing Ngiap, independent non-executive chairman Abdul Razak Haji Ipap, TA Securities Holdings Bhd executive director of operations Tah Heong Beng and head of corporate finance Dominic Seah
KUALA LUMPUR: Sik Cheong Bhd aims to raise RM17.8mil from its initial public offering (IPO), en route to a listing on the ACE Market on Bursa Malaysia.
The company, which via its subsidiaries is principally involved in the repackaging, marketing and distribution of RBD palm olein oil products, said it has plans to expand its packaging facility and grow its fleet of delivery trucks.
Managing director Wong Hing Ngiap said about 40% or RM7.2mil of the IPO proceeds will be used to set up a new packaging facility.
This will involve rebuilding the factory adjacent to its exiting facility, increasing its operational space by 88.1% to about 38,525 sq ft.
"This rebuild will facilitate our new product – high oleic soybean oil, creating an additional income stream for our group.
"The expansion also addresses the current space constraints for repackaging and storing RBD palm olein oil products at existing facility," he said.
Additionally, the company will purchase new machinery and equipment for the repackaging of high oleic soybean oil and RBD palm olein oil products.
Wong said he believes the demand for RBD palm olein cooking oil products will continue to grow due to its essential role as a daily food ingredient.
"We see substantial market potential, as palm oil remains the most widely consumed vegetable oil in Malaysia, accounting for 76.7% of the total vegetable oil volume sold in 2023.
"In fact, the RBD palm olein oil repackaging industry in Malaysia is projected to grow at a compound annual growth rate (CAGR) of 20.9% to reach RM12.8bil in 2026," he said.
As part of the group’s growth strategy, Sik Cheong plans to extend its geographical reach beyond Kuala Lumpur and Selangor into neighbouring states such as Perak, Negeri Sembilan, Melaka and Pahang to capture a larger customer base.
This initiative will be supported by an expansion of its delivery trucks fleet, which will be funded by 5% or RM900,000 of the IPO proceeds.
The remaining funds from the IPO will go towards working capital and to cover the listing expenses, said Wong.
Sik Cheong's IPO comprises a public issuance of 66 million new shares, or about 24.8% of its enlarged share capital and an offer for sale of 20 million existing shares, representing 7.5% of its enlarged share capital, via private placement to selected investors.
Out of the 66.0 million new shares, 13.3 million shares will be made available to the Malaysian Public through balloting, four million shares to eligible directors, employees and persons who have contributed to the success of Sik Cheong, and the remaining 48.7 million shares will be reserved for private placement to selected investors.
Based on the IPO price of 27 sen per share and its enlarged issued shares of 266 million, Sik Cheong will have a market capitalisation upon listing of about RM71.8mil.
