June 12th – $OCEAN FRESH BERHAD (0312.MY)$ is set to launch an initial public offering (IPO), with the subscription period running from June 12th to June 20th. The company plans to issue a total of 50,050,000 new shares. Out of these, 10,510,000 shares will be available for application by the Malaysian public; 1,710,000 shares will be made available for eligible directors, employees, and individuals who have contributed to the success of Ocean Fresh; and 37,830,000 shares will be offered to selected investors through a private placement. The shares are priced at RM 0.28 each, with a minimum subscription of 100 shares per lot.

Company Profile

Ocean Fresh Berhad is an established frozen seafood processor and trader, with its inception dating back to the early 2000s. The company's operations are anchored in its main processing facilities, which have grown to include advanced equipment such as semi-contact blast freezers and cold rooms to meet substantial production demands. Ocean Fresh Berhad offers a range of products, processed from locally wild-caught seafood, and markets these under the "Sea Planet" brand, as well as through private labels and unbranded lines.

Ocean Fresh Berhad has demonstrated a staunch commitment to quality and adherence to international standards, achieving significant certifications such as HACCP, GMP, FDA, and HALAL, which have supported its expansion into global markets, including the EU, Asia Pacific, the US, and beyond.

According to a report by Providence, the company has captured a 2.7% share of Malaysia's seafood processing industry, underpinned by a comprehensive global network of suppliers and customers. Ocean Fresh Berhad's processing capabilities are impressive, boasting an annual production capacity of approximately 18,000 tonnes of frozen seafood products. This capacity is supported by a fleet of 18 semi-contact blast freezers and a cold storage capacity of 1,700 tonnes, ensuring the company's ability to meet the demands of a diverse and expanding customer base.

Financial Information

In terms of financial performance, Ocean Fresh Berhad's total revenue for the fiscal years 2020 to 2022 were RM 94.055 million, RM 158.469 million, and RM 156.330 million respectively. During the same timeframe, the company's net profits were RM 2.403 million, RM 4.020 million, and RM 5.581 million. The profit CAGR from 2020 to 2022 was approximately 52.4%.

Industry Overview

The seafood processing industry in Malaysia grew at a CAGR of 10.1% between 2015 and 2022, from RM2.9 billion in 2015 to RM5.7 billion in 2022. The industry size declined in 2022 as a result of lower demand for seafood as there was a significant rise in prices of seafood, particularly for fishes, in the year. The significant seafood price increase was due to a lack of availability of wild-caught seafood due to unfavourable weather conditions, and lack of labour supply which was caused by the travel restrictions that were implemented to curb the Coronavirus disease (“COVID-19”). Moving forward, PROVIDENCE estimates that the seafood processing industry in Malaysia will grow from an estimated RM6.2 billion in 2023 to reach RM7.4 billion by 2025, at a CAGR 9.2% between 2023 and 2025.

Utilisation of proceeds

According to the prospectus, the company intends to allocate the net proceeds from the share offering for the following purposes: capital expenditure for a new cold storage facility, meet working capital requirements, and allocated for estimated listing expenses.

The company plans to allocate a portion of the gross proceeds from its Public Issue for the purchase of raw materials, which include fresh and frozen seafood. These raw materials represent a significant portion of the Group's total cost of sales, accounting for approximately 92.44% to 93.72% during the Financial Years.

In line with the Group’s business expansion strategy, the company is looking to allocate a portion of the gross proceeds from its Public Issue towards partially financing the construction of a new cold storage facility on PSFD Land 1.

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