Supreme Consolidated Resources Berhad Launches IPO, Subscription Opens on 28th October 2024

The Group provides market access and coverage for consumer products in Sarawak and Sabah, where it is principally involved in the distribution of third-party brands as well as its own brands of Frozen and Chilled Food Products and Ambient Food and Beverage Products. In 2023, the Group expanded into the distribution of Non-Food and Beverage Products in Sarawak and Sabah.

The Group's range of Frozen and Chilled Food Products includes, but is not limited to, frozen meat products, frozen seafood products, frozen potato-based products, frozen vegetables and fruits, frozen processed products, frozen pastries, butter, and cheese. The range of Ambient Food and Beverage Products includes, but is not limited to, cream, milk, pasta, juices, bread, seasonings, and dressings. The Non-Food and Beverage Products (Non-F&B Products) comprise cleaning and hygiene products such as detergents and toothpaste, which are distributed by Supreme Trading following its acquisition by the Company in May 2023.

For the FYE 2023, revenue from the distribution of third-party brands amounted to RM186.80 million, or 93.57% of the Group's total revenue, while the remaining RM12.84 million, or 6.43%, was derived from the distribution of the Group's own brands of products. Revenue contribution from Frozen and Chilled Food Products accounted for 88.34% of the Group's total revenue, followed by Ambient Food and Beverage Products, which contributed 11.49% of the total revenue, and Non-Food and Beverage Products, which contributed 0.17% of the total revenue.

Their business model is as follows:

Based on the IPO Price of RM0.25, the total gross proceeds of RM17.50 million from the public issue will be used by the company in the following manner:

The company has allocated RM11.00 million, representing 62.86% of the gross proceeds from the Public Issue, for the expansion of a warehouse facility. This new facility will serve as an additional distribution centre for the Group and is expected to cater to the expansion of the Group’s product range.

The company has allocated RM4.00 million, representing 22.86% of the gross proceeds from the Public Issue, for the day-to-day operations of the Group. This includes but is not limited to, staff-related expenses, payments to suppliers, and general expenses such as utilities charges and repair and maintenance.

The company has allocated RM2.50 million, representing 14.28% of the gross proceeds from the Public Issue, to meet the estimated cost of its Listing.

The company has shown steady financial growth, with revenues increasing from RM187.50 million in FYE 2021 to RM199.64 million in FYE 2023, representing a compound annual growth rate (CAGR) of 3.19%. This steady growth highlights the company's successful market expansion and consistent performance.

Gross Profit (GP) has also shown a positive trend, increasing from RM21.76 million to RM23.86 million over the same period, with a CAGR of approximately 4.72%. This indicates that the company is effectively managing its costs and improving operational efficiency.

Profit Before Tax (PBT) has seen a significant rise, increasing from RM10.88 million to RM12.88 million. Profit After Tax (PAT) has also grown, increasing from RM7.65 million in FYE 2021 to RM9.22 million in FYE 2023. This growth is a positive indicator for shareholders and demonstrates the company's overall financial health.

For the financial period ending 2024, the company has continued to sustain its financial momentum, reporting revenues of RM132.70 million, a Gross Profit (GP) of RM15.66 million, a Profit Before Tax (PBT) of RM9.06 million, and a Profit After Tax (PAT) of RM6.29 million. These figures indicate that the company remains on a strong financial trajectory and is well-positioned for future growth.

Supreme Consolidated Resources Bhd provides market access and coverage for consumer products in Sarawak and Sabah, where it is principally involved in the distribution of a wide range of third-party brands as well as its own brands of frozen and chilled food products, ambient food and beverage products, and non-food and beverage products. The distributive trade is divided into wholesale and retail sectors. Wholesale trade refers to the resale of goods to resellers, such as retailers or other wholesalers. Retail trade refers to the resale of goods mainly to end consumers or users. In some situations, wholesale trade also involves the sale of goods to industrial, commercial, institutional, and professional users.

The industry size of the distribution of food, beverage, and discretionary products in Sarawak increased from an estimated RM6.1 billion in 2018 to an estimated RM6.7 billion in 2022, representing a compound annual growth rate (CAGR) of 2.0%. The industry registered a year-on-year growth rate of 11.2% in 2022 compared to 2021.

Providence projects that the food, beverage, and discretionary products distribution services industry in Sarawak will grow from RM15.8 billion in 2022 to RM17.6 billion in 2026, at a CAGR of 2.7%. This projection takes into account the industry's historical growth rate and key growth drivers that support future demand for food, beverage, and discretionary products.

This IPO offers 70,000,000 new ordinary shares in Supreme Consolidated Resources Bhd (SCRB). The shares will be allocated as follows:

– 8,600,000 new shares made available for application by the Malaysian public;

– 7,650,000 new shares made available for application by eligible directors, key senior management, employees, and business associates of SCRB and its subsidiaries;

– 53,750,000 new shares to be placed privately with Bumiputera investors approved by the Ministry of Investment, Trade and Industry, Malaysia.

1. Wide Range of Third-Party Brands and Products for Distribution：The Group offers a diverse portfolio of approximately 1,472 SKUs from 79 local and foreign third-party brands, as well as its own brands. These include Frozen and Chilled Food Products and Ambient F&B Products. The Non-F&B Products consist of cleaning and hygiene items. This extensive range helps meet the varied needs of a broad customer base.

2. Wide Distribution Network：The Group utilizes an indirect distribution channel, selling through intermediaries such as agents, stockists, and distributors. These intermediaries further sell to wholesalers, retailers, and HORECA establishments. The Group also serves retailer customers like supermarkets and sundry shops, as well as food service operators. As of the LPD, the Group has 3,440 customers.

1. Reliance on Third-Party Brands：The Group's revenue is heavily dependent on the distribution of third-party brands, which accounted for 93.57% of total revenue in FYE 2023. Procurement of frozen buffalo meat from Allanasons Private Limited contributed 23.38% of total purchases in FYE 2023. Disruptions in relationships with third-party brand owners could negatively impact the business.

2. Risk of Disruptions to Warehousing and Cold Storage：The Group's operations rely on the continuous functioning of its warehousing and cold-storage facilities and transportation vehicles. Disruptions due to fire, power failure, breakdowns, or theft could adversely affect business operations.

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