IPO Series – Sik Cheong Berhad – A downstream palm oil company

Timetable of IPO

Figure 1: IPO Timetable

Source: Sik Cheong IPO Prospectus
-Will be listed on the ACE Board

Info of IPO
Enlarged no. of shares upon listing: 266M
IPO price: RM0.27
Market capitalization: RM71.82M
Estimated funds to raise from Public Issue:  RM17.82M
PE ratio = 11.34x (based on FY2023)

Business Model

Figure 2: Business model

Source: Sik Cheong IPO Prospectus

Utilization of Proceeds (refer to Figure 2)
1)Expansion of packaging facility (RM7.18M or 40.29%)
2)Repayment of bank borrowings (RM0.89M or 5.00%)
3)Working capital (RM5.95M or 33.39%)
4)Listing expenses (RM3.8M or 21.32%)

Figure 3: Utilisation of proceeds

Dividend Policy
-The group does not have any formal dividend policy

Major Customers

Figure 4: Major customers in FYE2024

Source: Sik Cheong IPO Prospectus

Financial Summary & Industry Overview
-From FYE2021 to FYE2024 (31 March), the group’s revenue increased from RM42.57M to RM79.58M, or an increment of 86.93%, while the PAT was increased from RM1.85M to RM6.33M within the same period.
-Nonetheless, from the financial position, the group’s retained profit has shown a CAGR of 15.68%, from RM16.713M to RM26.293M, which translated into a higher figure of total equity.
-Based on the market research report, the RBD palm olein oil repackaging industry size in Malaysia has shown a CAGR of 40.6% within 2018 – 2023, and it’s forecasted that it will slow down to a CAGR of 20.9% from 2024 – 2026.

Figure 5: Financial highlights (Revenue, PAT, and PAT margin)