• Thailand-based consumer packaged foods distributor who serves as an exclusive distributor for ChaCha brand products for Thailand market, distributing to 43 distribution points covering Central, Northeast, Northern, and Southern regions.

• We project core earnings to grow from (i) improved demand amid economic recovery, (ii) reduced purchase price from suppliers resulted from lower raw material, packaging and energy cost, as well as (iii) product range expansion.

• Wellspire is valued by pegging its FY23f EPS of 1.8 sen to 15x PE, leading to a FV of RM0.27.

Company Background

• Wellspire Holdings Bhd‘s (Wellspire) history traces back to 2007 when its subsidiary, Bai Li Enterprise (Bai Li) was incorporated by Saranjit Wang (Wellspire’s executive director) and six individuals as an exporter of snack food products namely fried fish and dried fruits sourced from Thailand to China. As sales in China were not encouraging, the group discontinued the export business in 2010 and started importing green bean snacks from Suzhou.

• Since 2012, the group stopped importing green bean and started distributing ChaCha brand sunflower seeds to retailers in Thailand. There were no other distributors selling ChaCha brand sunflower seeds in Thailand prior to 2012. Leveraging on Bai Li’s ability to introduce the ChaCha brand products to the operators in modern trade, the group was appointed by QiaQia as the exclusive distributor of ChaCha brand of sunflower seeds in Thailand in 2013.

• In 2014-2016, the group commenced sales of ChaCha brand sunflower seeds to Lotus’s hypermarket. Meanwhile, Wellspire started selling snack food products to (i) Makro cash and carry stores, (ii) FamilyMart convenience store, and (iii) a wholesaler, Chaisaeng D.C. Co. Ltd., that resells to traditional retailers such as sundry shops, market stalls, and street vendors in Southern Thailand. Additionally, Mo Guopiao and He Haibin joined Bai Li Enterprise as shareholders in 2015.

• In 2018, the group relocated and expanded its operations to a distribution centre in the district of Thanyaburi in Pathum Thani province. The sales of snack food products to another wholesaler, namely Mega Alliance for traditional retailers including sundry shops and small retailers in the outskirt areas of city or town centres, began in 2019. Meanwhile, the group commenced distribution of King Kong brand of mixed nuts energy bar imported from China that year.

• In 2020, it started distributing layer cakes under the 3rd party Cundo brand and Chinese-imported chocolate snacks under its Miyu brand. Keymall Retail Co. Ltd (Keymall Retail) was incorporated as online retailer of snack food products via its ecommerce platform namely “www.keymall.me” as well as 3rd party online platform such as Shopee and Facebook, Thailand. Subsequently in August 2021, Wellspire was incorporated by Mo Guopiao to facilitate the listing of the group on the ACE Market of Bursa Malaysia.

Source: Mplus Research - 16 Jan 2023