Today I try my luck on this Sik Cheong IPO.
What is Sik Cheong DO???
*Sik Cheong IPO – A well-oiled growth path* (Trading Lens- Non-rated)
Sik Cheong is positioned for growth in the downstream segment of the palm oil industry. The company repackages, markets and distributes refined, bleached and deodorised (RBD) palm olein cooking oil under its house-brands, “Sawit Emas” (88% FY3/24 revenue) and “Vitamas” (5%). Its market share in the local RBD palm olein oil repackaging industry stood at 1% in 2023.
*Is the company profitable?*
The group’s revenue and net profit rose steadily with a 3-year CAGR of 23% and 51% respectively in FY3/21-24, backed by average PATAMI margin of 14%. The group benefitted from the government’s subsidy programme under Cooking Oil Stabilisation Scheme (COSS - 26% of FY3/24 revenue) and Program Mekanisme Kawalan Harga Minyak Masak (MKHMM – 1%). However, the MKHMM programme expired in June 2023 as government has ceased issuing approved quota.
*Key growth drivers*:
1) Increasing RBD palm olein cooking oil consumption in tandem with population growth,
2) New revenue stream from high oleic soybean oil,
3) Rising trend in hotel, restaurants and catering operators, and
4) Government initiatives and subsidy programmes
*Valuation?*
•The IPO price of RM0.27 (RM72m market capitalisation) values Sik Cheong at CY23 P/E of 11.5x. Meanwhile, FBMSC and KLCSU’s CY23 P/E stood at 18.3x and 16.9x respectively, according to Bloomberg.
The closing date for the IPO application will be on 30 July 2024. The group will be listed on the ACE Market on 13 August 2024.
Source: https://tinyurl.com/22244k2k