With a legacy spanning over three decades, Sik Cheong Berhad (SCB) has entrenched itself in the repackaging, marketing, and distribution of RBD palm olein oil products. Serving a diverse customer base exceeding 500 annually, including retailers, wholesalers, and food industry operators, SCB has announced ambitious plans for the fiscal years 2025 to 2027.
Financial Projections and Valuation
For the upcoming fiscal years, SCB anticipates a revenue growth of 10.7% to 12.3%, projecting revenues between RM89.4 million to RM109.6 million. Concurrently, core net profits are expected to rise by 9.8% to 14.1%, ranging from RM6.9 million to RM8.8 million.
These optimistic forecasts are underpinned by SCB's expansive strategies across Peninsular Malaysia and increasing demand for its RBD palm olein oil products.
Malacca Securities (MSSB), in a note today, said they have assigned a fair value of RM0.495 per share to SCB, marking an 83.3% upside from its IPO price of RM0.27. This valuation is based on a forward Price-to-Earnings (P/E) ratio of 18 times, pegged to an estimated mid-FY26 earnings per share of 2.75 sen.
The forward P/E of 18x reflects a discount of 21% to 33% compared to industry benchmarks, considering SCB's smaller market capitalization within the GICS Consumer Staples Segment.
Diversification into High Oleic Soybean Oil
Looking to broaden its product range and revenue streams, SCB is set to venture into high oleic soybean oil by the second quarter of 2026.
This strategic move aims to reduce dependency on its dominant RBD palm olein oil segment, which currently contributes between 99.1% to 99.6% of total revenue. The initiative includes significant investments in infrastructure, including the reconstruction of Factory No. 9 into a modern 3-storey facility, expanding operational capacity by 88% to approximately 39,000 square feet.
Geographical Expansion and Market Reach
While historically focused on Kuala Lumpur and Selangor for 95% to 98% of its revenue, SCB is eyeing new growth opportunities in adjacent states such as Perak, Negeri Sembilan, Melaka, and Pahang. This strategic expansion leverages SCB's existing logistical capabilities from Factory No. 11, facilitating efficient distribution and market penetration into these regions.
Financial Performance
Dven by a robust CAGR of 23.2%, SCB's revenue surged to RM79.6 million in FY24 from RM42.6 million in FY20. This growth was propelled by increased sales volume of non-subsidized palm olein oil products amid rising average prices influenced by higher Crude Palm Oil (CPO) prices.
Sik Cheong Berhad's strategic initiatives underline its commitment to sustained growth and market leadership in Malaysia's competitive consumer staples sector. The company's expansion into high oleic soybean oil and enhanced operational capacities position it strongly for future profitability and shareholder value creation, MSSB added.