OB Holdings Berhad launches IPO, Subscription Opens on September 27th

The IPO comprises a public issue of 120,000,000 new ordinary shares in OB Holdings ("Shares") distributed as follows:

– 19,582,000 new shares are made available for application by the Malaysian public.

– 7,833,000 new shares are made available for application by eligible directors, employees, and persons who have contributed to the success of our group.

– 43,632,000 new shares are made available by way of private placement to selected investors.

– 48,953,000 new shares are made available by way of private placement to selected Bumiputera investors approved by the Ministry of Investment, Trade and Industry of Malaysia.

OB Holdings Berhad, founded in 2023, is a Malaysian investment holding company with a substantial footprint in the fortified food and beverage (F&B) and dietary supplements sector. Through its subsidiaries—Orient Biotech, Orient Laboratories, and Bonlife—the company specializes in manufacturing and product development for fortified F&B and dietary supplements, serving both domestic and global markets.

The Group's business model is centered on providing comprehensive manufacturing services to third-party brands, covering the entire process from product development to distribution. This suite of services encompasses product formulation, registration, raw material procurement, manufacturing, and packaging. Furthermore, OB Holdings strengthens its market presence with its own house brands, including Bonlife, GoHerb, Zen Night, Sleepin’ Beaute, EZ:Nitez, Beyoute, Zen Youte, and Zenliv, all of which are developed through its robust in-house product development capabilities.

OB Holdings has established a robust distribution network, reaching consumers directly through e-commerce platforms and indirectly through a network of distributors and retailers. This strategic approach has significantly boosted the company's revenue, which reached RM50.886 million as of May 2024.

OB Holdings maintains a robust quality assurance system, with certifications including ISO 9001:2015, FDA, HACCP, and NASAA Certified Organic. As of August 30, 2024, 10 of the Group's 12 organic products—spanning food ingredients, house brand products, and third-party branded products—have achieved NASAA-certified organic status.

A summary of the company's business model is set out below:

OB Holdings Berhad demonstrated a financially robust position as of 31 May 2024, with a clear upward trend in both revenue and profit over recent financial years. The company's revenue has consistently grown, reaching a high of RM50.9 million in the financial year ending (FYE) 2024, up from RM29.7 million in FYE 2021. This growth indicates a strong market presence and an effective revenue generation strategy.

Profit after tax has also shown a positive trajectory, with RM5.5 million recorded in FYE 2024, a significant increase from the RM4.7 million in FYE 2021. The company's ability to convert revenue into profit is evident in its net profit margins, which have remained relatively stable over the years.

Gross profit has risen from RM11.9 million in FYE 2021 to RM21.7 million in FYE 2024, reflecting the company's operational efficiency and its capability to maintain a healthy profit margin. The gross profit margin has fluctuated slightly but remains robust, averaging around 42%.

Administrative expenses have increased, which can be attributed to the company's expansion and the associated higher costs of professional services and staff-related expenses. Selling and distribution expenses have also risen, reflecting the company's investment in marketing and distribution to support its growth.

The fortified food and beverage (F&B) and dietary supplements industry is a thriving sector within the health and wellness market, driven by the increasing health consciousness among consumers. This industry encompasses a wide range of products designed to supplement daily nutritional intake, including fortified F&B that are enriched with vitamins, minerals, and other nutrients, as well as dietary supplements that offer concentrated forms of these active ingredients.

The fortified F&B segment includes products such as fortified milk, fruit juices, energy bars, and meal replacement drinks, which are formulated to provide additional health benefits beyond their basic nutritional content. Dietary supplements, on the other hand, are products like vitamins, minerals, botanicals, amino acids, and enzymes in various forms such as tablets, capsules, powders, and liquids. These are intended to complement a balanced diet and support overall health and well-being.

The industry has been experiencing steady growth, underpinned by factors such as an aging population, rising healthcare costs, increasing prevalence of lifestyle-related diseases, and a growing trend towards preventive healthcare. Moreover, the COVID-19 pandemic has further heightened awareness about the importance of immunity and nutrition, leading to a surge in demand for health supplements and fortified foods.

In Malaysia, the fortified F&B and dietary supplements industry has been growing at a healthy pace, with the market size expanding from RM10.53 billion in 2018 to RM14.68 billion in 2023, at a compound annual growth rate (CAGR) of 6.87%. The dietary supplements segment has seen even more robust growth, increasing from RM1.29 billion in 2018 to RM2.23 billion in 2023, at a CAGR of 11.57%. As such, cumulatively, the fortified F&B and dietary supplements industry in Malaysia grew from RM11.82 billion in 2018 to RM16.91 billion in 2023, registering a CAGR of 7.43%. This growth is attributed to the country's growing health consciousness, urbanization, economic development, and a proclivity towards maintaining a healthy lifestyle.

In summary, the fortified F&B and dietary supplements industry in Malaysia is a dynamic and growing sector with significant potential, shaped by increasing health awareness and a burgeoning market for health-oriented products.

Based on the IPO Price of RM0.24, the total gross proceeds of RM28.80 million from the company's Public Issue will be utilised by the Group in the following manner:

1. Business Expansion:

a. Repayment of bank borrowings: RM14.90 million (51.74%) - To be utilised within 36 months post-listing to finance the construction of the New Serendah Factory and the acquisition of land.

b. Purchase of machines: RM5.00 million (17.36%) - Allocated for the purchase of new machinery to support the Company's manufacturing activities and expansion plans, to be utilised within 36 months post-listing.

c. Product development expenditure: RM0.90 million (3.12%) - Set aside for enhancing the Company's research and development capabilities, including the establishment of a new laboratory and conducting clinical trials for new products, to be utilised within 36 months post-listing.

2. Marketing and advertisement: RM1.00 million (3.47%) - Allocated for marketing and advertising efforts to promote the Company's brands and products, to be utilised within 24 months post-listing.

3. Working capital: RM3.00 million (10.42%) - This sum is allocated for working capital to support the Company's day-to-day operations and to fund its growth strategies, to be utilised within 24 months post-listing.

4. Estimated listing expenses: RM4.00 million (13.89%) - Budgeted for estimated listing expenses, covering professional fees, regulatory costs, underwriting and brokerage fees, printing and advertising, and miscellaneous expenses, to be utilised within 3 months post-listing.