Financial Highlights

The following table sets out the key financial and operational highlights of the Group for the FYEs Under Review:

• The revenue grew from RM 42 million in FYE 2021 to RM 79 million in FYE 2024. The company is expanding its market share in this industry. 

• The gross profit margin increased from 12.76% in FYE 2021 to 16.00% in FYE 2024. This shows that the group can maintain the cost of materials efficiently.

• The PAT margin grew from 4.35% in FYE 2021 to 7.95% in FYE 2024.

• The gearing ratio is 2.38, which is below the benchmark. This shows the company can maintain its liquidity well and has room to increase the debt ratio to maximize the distribution between debt and equity. (A good gearing ratio should be between 0.25 – 0.5).

Major customers and suppliers

The Group has more than 500 customers in each of the FYEs Under Review. Although NSK group of companies, Low Seat Hoong group of companies, TCRS Restaurants Sdn Bhd and Sri Ternak group of companies have consistently been the Group’s top 5 customers for the FYEs Under Review, none of these customers contributed more than 10.00% of the Group’s revenue during the FYEs Under Review. Thus, the Group is not dependent on any of the major customers.

For the Group’s major customers that are retailers and wholesalers, they generally purchase from multiple companies selling RBD palm olein oil products to offer their customers a wider range of products. For the Group’s major customers that are food manufacturers, they may also purchase from more than 1 supplier. Therefore, the Group’s major customers are not dependent on the Group for the supply of RBD palm olein oil products. 

Major Suppliers

The Group sources the main material (i.e. RBD palm olein oil) from 4 local palm oil refineries during the FYEs Under Review. Out of these 4 suppliers, the Group has maintained business relationship with 3 of them for 10 years or more as at the LPD. The Group is able to procure non-subsidised RBD palm olein oil from any other suppliers and thus, is not materially dependent on these suppliers for the supply of RBD palm olein oil. 

As at the LPD, the Group procures the subsidised RBD palm olein oil from 2 suppliers (i.e. Ngo Chew Hong Oils & Fats (M) Sdn Bhd and Intercontinental Specialty Fats Sdn Bhd). If the Group is not able to procure from these suppliers, they may procure from other suppliers, subject to the aforementioned process being followed through. Thus, the Group is not materially dependent on Ngo Chew Hong Oils & Fats (M) Sdn Bhd and Intercontinental Specialty Fats Sdn Bhd.

Industry Overview

The RBD palm olein oil repackaging industry in Malaysia can be measured based on the revenues of industry players involved in the repackaging, marketing and/or distribution of RBD palm olein oil products. This may be sold either under their own or third-party brands. 

Between 2018 and 2023, the RBD palm olein oil repackaging industry size in Malaysia grew from RM1.3 billion to an estimated RM7.2 billion, registering a compound annual growth rate (“CAGR”) of 40.6% over the period. Moving forward, the RBD palm olein oil repackaging industry in Malaysia is expected to grow from an estimated RM8.7 billion in 2024 to reach RM12.8 billion in 2026, at a CAGR of 20.9% over the period.

Continuous demand for RBD palm olein oil products and other related downstream products from consumers will drive the growth of the RBD palm olein oil repackaging industry 

In 2023, the sales volume of palm oil constituted 76.7% of the total volume of vegetable edible oil sold in Malaysia. In addition, the per capita consumption of palm oil is also higher than other types of vegetable oils. In 2023, the domestic consumption of palm olein oil per capita in Malaysia was 25.7 kilograms (“kg”) per capita, where else the per capita consumption of other vegetable edible oils such as palm kernel oil was 3.7 kg per capita, soybean oil was 2.1 kg per capita, coconut oil was 1.2 kg per capita and peanut oil was 0.1 kg per capita.5 This indicates that RBD palm olein oil products are widely consumed by the majority of the Malaysian population. 

The demand for RBD palm olein oil products and other related downstream products (such as food products e.g. ice cream, instant noodles and creamer, as well as oleochemicals e.g. soap) amongst consumers is driven by the following factors:

(i) Growth in population

(ii) Government subsidy programmes and initiatives

(iii) Lower price and ease of accessibility 

In Malaysia, the performance of the F&B industry has improved over the years, albeit a decline in 2020 and 2021 due to the effects of the COVID-19 pandemic. During the COVID-19 pandemic, many businesses had to reduce operational capacity or stop operations entirely. Overall, the growth of the F&B industry may be depicted by the gross domestic product (“GDP”) of the F&B industry in Malaysia, which recorded a CAGR of 3.9%. The overall F&B industry increased from RM40.6 billion in 2018 to RM49.2 billion in 2023, despite the temporary dip to RM37.8 billion and RM35.9 billion in 2020 and 2021 respectively. As Malaysia recovers from the COVID-19 pandemic and opened all economic sectors since April 2022, the nation’s F&B industry is expected to grow due to the growing demand for food services.

Market Size And Share

Based on Sik Cheong Group’s revenue from its RBD palm olein oil repackaging, marketing and distribution business segment of RM59.4 million for the FYE 31 March 2022 and the total RBD palm olein oil repackaging industry size of RM4.3 billion in 2021, Sik Cheong Group garnered an industry revenue share of approximately 1.4% in 2021. Sik Cheong Group’s industry revenue share was approximately 1.3% in 2022, with a revenue of RM77.9 million for the FYE 31 March 2023 and a total RBD palm olein oil repackaging industry size of RM5.9 billion in 2022. In 2023, Sik Cheong Group’s industry share revenue was approximately 1.1% in 2023, with a revenue of RM79.2 million for the FYE 31 March 2024 and a total RBD palm olein oil repackaging industry size of RM7.2 billion in 2023.

Future plans and strategies for EPB GROUP BERHAD

They have identified the following strategies to strengthen their position:

1. The group intends to expand the product range to include high oleic soybean oil

2. The group intends to grow its geographical reach to grow the sales

MQ Trader View 

Opportunities

1. The company has a large customer base and some of the customers have a wide network of end-customers.

2. The company has the ability to reliably and promptly deliver products.

3. The company has a sustainable business due to palm oil being an essential food ingredient.

Risk 

1. The company may be adversely affected if they are unable to source RBD palm olein oil in sufficient quantities and/or at acceptable prices.

2. The company may face disruptions in their packaging facility and business operations.

3. The company’s business operations and financial performance may be adversely affected should there be a failure in renewing their licences.

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