Supreme Consolidated Resources Berhad will be IPO on Bursa Malaysia’s ACE Market. This one’s getting a lot of buzz, especially in Sarawak’s consumer goods sector. Let’s dig into the numbers, the business strategy, and why it might be worth keeping an eye on this listing.
Business Breakdown: What Does Supreme Do?
Alright, let’s talk about what Supreme is all about. The company has two main operations:
- Distribution of Household & Commodity Goods: They carry a whopping 79 third-party brands with over 1,400 SKUs. That’s a solid range covering all sorts of everyday products such as Ramly, Lady Choice Pacific West and more.
- In-House Packaging & Warehousing: They’ve got 3 of their own brands and 55 in-house SKUs under the “Supreme” label. This adds a layer of product control and potential for higher margins on their proprietary goods.
Their customer base spans wholesalers, retailers, and food service operators, which covers a large market—think supermarkets, HORECA (hotels, restaurants, and cafes), and distributors. This broad coverage means they’re tapping into both B2B and B2C markets, providing some diversification in revenue streams.
The Basics: IPO Details & Key Dates
So, here’s what you need to know about the IPO itself:
- Listing on: Bursa Malaysia’s ACE Market
- Sector: Consumer Products & Services
- IPO Price: RM 0.25
- Market Cap: RM 107.5 million (based on the enlarged share base)
- PE Ratio: 11.9x (FY23 projected earnings)
Mark your calendars! The IPO opens on October 28, 2024, and closes on November 15, 2024. Balloting’s happening on November 19, and the listing date is set for November 29.
Where’s the Money Going?
One of the first things to check in any IPO is how they plan to use the funds. Here’s the breakdown for Supreme:
- Expansion of Warehouse Facility: RM 11 million (63%)
- Working Capital: RM 4 million (23%)
- Listing Expenses: RM 2.5 million (14%)
Since their average utilization rate for the frozen storage room in Kuching is at 100%, they plan to expand their warehouse facility by adding 1,500 pallet spaces. This expansion will allow them to store more products and improve distribution efficiency to locations like Sibu and Bintulu in Sarawak.
Financials: Revenue Growth & Margins
Now, let’s get to the juicy stuff—the financials. Supreme has shown some pretty steady numbers:
- Revenue: They recorded RM 199.64 million for FY23, though it dipped slightly from the previous year. They’re projecting an uptick to RM 132.70 million for FPE 24, which would be a 13.5% increase.
- Gross Profit Margin: Supreme Consolidated Resources Berhad has shown a steady GP margin improvement, reaching 12.5% in FYE 23, though it’s projected to dip slightly to 11.8% in FPE 24, reflecting resilient cost management.
- PAT (Profit After Tax): The PAT margin has been steadily increasing, with a 9.8% CAGR over the last few years. It’s currently at 5.4% for FPE 23 but expected to come down slightly to 4.7% in FPE 24.
In a nutshell, we’re seeing a company with consistent performance but facing some cost pressures. The slight decrease in GP margin could be due to rising costs or competitive pricing pressures. Still, their PAT growth shows they’re managing expenses well.
Balance Sheet: Financial Health at a Glance
Supreme’s balance sheet looks solid, with RM 124.66 million in total assets and a current ratio of 2.26x. A gearing ratio of 0.33x suggests low debt relative to equity, which is a healthy sign for new investors. Plus, the 38% dividend payout ratio shows a commitment to returning value to shareholders. So, if you’re looking for stability, their financial position is reassuring.
Conclusion
Supreme Consolidated Resources Berhad’s IPO is one for the books, especially for those interested in consumer goods and distribution in Malaysia. They’re not reinventing the wheel, but they have a well-defined business and solid growth plans. If you’re after steady returns and value dividend payouts, Supreme might be a good addition to your portfolio. However, keep an eye on their margins and expansion strategy—those will be the key indicators of their future growth.