Company Background

The company was incorporated in Malaysia under the Act on 6 September 2019 as a private limited company under the name of PT Resources Holdings Sdn Bhd and was subsequently converted to a public limited company on 21 September 2020.

The Company is an investment holding company. Through the subsidiaries, the Group is principally involved in the processing and trading of frozen seafood products as well as retail trading of meat and non-meat products.

The group structure is as follows:

The following is an overview of the Group’s business model:

Use of proceeds

1. Capital expenditure for new cold storage warehouse- 36.3% (within 36 months)
2. Working capital - 55.9% (within 12 months)
3. Estimated listing expenses - 7.8% (within 3 months)

Capital expenditure for new cold storage warehouse- 36.3% (within 36 months)

The company intends to allocate RM17.6 million or 36.3% of the gross proceeds from the Public Issue to finance the capital expenditure for a new cold storage warehouse, which will increase the capacity from 700 tonnes to 4,000 tonnes. The new cold storage warehouse is intended to be constructed on the Group’s vacant land located at PM 31091, Lot 150651, Mukim Kuala Kuantan, Daerah Kuantan, Negeri Pahang, which is approximately 5 km from the KIFPP Processing Facility and the “MO Wholesale Center” outlet

The company expects the new cold storage warehouse to have the following specifications:

The cold rooms will be used to store frozen seafood supplies and products, chilled meat, frozen meat, fruits, and vegetables. The additional storage capacity would facilitate the Group to cater to the growing demand for frozen seafood and other products. The temperature of these cold rooms can be controlled individually to allow the storage of different products and supplies that are needed to be stored in the different temperature ranges.

The anteroom is to minimize the flow of warmer air into the cold rooms during the loading/unloading of goods at the loading/unloading area. The adjoining 3-story office building will be used as the administrative office for the operation of the new cold storage warehouse.

The breakdown of the utilization of proceeds for the new cold storage warehouse, which was derived based on a contractor’s quotation, is as follows:

For clarification, the breakdown above is indicative and is subject to the company's acceptance of the final quotation after our IPO. The company expects to finalize the building layout plan and obtain approval from the relevant authorities within 6 months upon receipt of the proceeds. The company will commence construction thereafter and expect that the new cold storage warehouse will be fully operational within 30 months from the commencement of construction.

Working capital - 55.9% (within 12 months)

Raw materials, which mainly comprise fresh and frozen seafood and meat products, are the largest cost of a sales item, contributing RM294.7 million or 94.9% of the Group’s total cost of sales for the FYE 2022. As such, the company intends to allocate RM27.2 million or 55.9% of the gross proceeds from the Public Issue for its purchase of raw materials. The breakdown for each type of raw materials to be purchased cannot be determined at this juncture as it is dependent on the customers’ orders and the availability of raw materials at the relevant point in time.

This working capital allocation is expected to enhance the Group’s liquidity and cash flow position and reduce its reliance on external financing to support the expected growth of the business as the company has been utilizing bankers’ acceptance to finance the purchases of raw materials from suppliers. As at 30 April 2022, the gearing ratio stood at 0.69 times, of which bankers’ acceptance comprised 52.6% of its total borrowings.

Business model

The group is principally involved in the processing and trading of frozen seafood products, and trading of other products. Over the past 4 financial years, the company has sold its products domestically in Malaysia and export directly to customers in the international market such as Saudi Arabia, China, the Philippines, and the UAE.

The company procures wild-caught and farm-raised seafood supplies from local and international wholesalers, aquaculture farms, and fishing enterprises. The company also procures other products from local and international wholesalers. The company processes the frozen seafood products in the KIFPP Processing Facility which is strategically located near the fish landing jetty in LKIM Complex, Kuantan, Pahang. Currently, there are two seafood processing facilities, including itself, located at the KIFPP, of which the company is the anchor company. Frozen seafood products are sold to wholesalers, food manufacturers, and retailers.

In addition, the company also sells frozen seafood and products through its outlets and its online marketplace, “MO Signature™”, to reach out directly to the end customers. As at the LPD, the company owns and operates 6 “MO Foodmart ™’ outlets and 1 “MQ Wholesale Centre” outlet located in Pahang and Terengganu. The diagram below illustrates the segments in which the Group is involved:

Principal Business Activities

The Group is principally involved in the following business activities:

1. Processing and trading of frozen seafood products; and
2. Retail trading of the other products.

A. Processing and trading of frozen seafood products

The KIFPP Processing Facility is strategically located near the fish landing jetty in LKIM Complex, Kuantan, Pahang, one of the busiest fish landing jetties in Peninsular Malaysia (according to the IMR Report). The KIFPP Processing Facility is well-equipped to undertake the following processing activities for a variety of frozen seafood products:

• defrosting;
• cleaning and cutting;
• freezing using IQF freezer and semi-contact blast freezer;
• glazing;
• packaging such as master packaging as well as vacuum and skin packs; and
• cold room.

B. Retails trading of other products

The company also sells the following other products which are externally sourced through its outlets and its online marketplace to provide a more comprehensive range of products to end customers:

1. chilled and frozen meat (i.e. poultry, beef, lamb, and mutton) which are ‘Halal’- certified as well as ready-to-eat and ready-to-cook meat and seafood products; and
2. non-meat products (i.e. fruits and vegetables, staple food, beverages, and non-food products such as tissue and cleaning solutions).

To facilitate the sales of meat products, the company also provides ancillary services at its outlets such as deboning, cutting, slicing, and mincing of meat.

Click here to continue the IPO -PT Resources Holdings Berhad (Part 2)

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