Ocean Fresh executive directors Teo Chee Han (second from right) and Siang Hai Yong (second from left) during launch of the company’s IPO prospectus on Wednesday, June 12, 2024. (Photo by Shahrill Basri/The Edge)

KUALA LUMPUR (June 12): Frozen seafood processor Ocean Fresh Bhd began taking orders for its initial public offering (IPO) exercise that aims to raise up to RM14.01 million ahead of its listing on the ACE Market of Bursa Malaysia.

The IPO is priced at 28 sen per share, according to its prospectus unveiled on Wednesday. At that price, Ocean Fresh would be worth RM58.84 million upon listing and valued at 6.45 times its 2023’s earnings. That compares to the consumer sector’s current double-digit valuations on Bursa Malaysia.

Under the IPO, Ocean Fresh is marketing 10.51 million shares to the Malaysian public. The company will also offer 1.71 million new ordinary shares for eligible persons and 37.83 million shares to select investors through private placement.

All in all, the IPO involves 50.05 million new ordinary shares, representing 23.8% of the enlarged share capital.

Application for the IPO will close on June 20, and Ocean Fresh is slated to be listed on the ACE Market on July 4.

Ocean Fresh is principally involved in the processing and trading of frozen seafood products, as well as the provision of frozen seafood processing services to its customers in Malaysia, Türkiye, China, Thailand, Vietnam and Japan.

Ocean Fresh said it will utilise more than half of the proceeds, or RM8 million, for its new cold storage facility in Kuantan, Pahang. The company has also budgeted RM2.51 million for working capital requirements and to spend RM3.5 million on estimated listing expenses.

“We expect the demand for seafood in Malaysia to continue to grow, driven by improving living standards and disposable income of the population,” said executive director Teo Chee Han. Malaysia is one of the top Asian markets for seafood, with per capita consumption of about 52.7 kilogrammes in 2021, he noted.

The IPO “will be instrumental in enabling us to cater to this increasing demand, while also fulfilling our plan to grow our exports of frozen seafood products to international markets, particularly China, as well as to venture into the processing and trading of dried seafood products,” he added.

For the financial year ended Dec 31, 2023 (FY2023), the company reported a net profit of RM6.95 million, or a basic earnings per share of 4.34 sen. Revenue for the period stood at RM159.45 million.

Ocean Fresh reported a gearing ratio of 0.12 times, with borrowings totalling RM5.36 million at the end of 2023.

According to its prospectus, Ocean Fresh currently does not have a fixed dividend policy. “Nonetheless, it is our intention to pay dividends to our shareholders in the future, to allow them to participate in our profits,” it added.

KAF Investment Bank is the principal adviser, sponsor, underwriter and placement agent for this IPO exercise.