MYMBN Bhd (0280) will be debuting on Bursa Ace Market today. MYMBN is principally involved in the processing and sale of edible bird’s nest (EBN), particularly raw unclean edible bird’s nest (RUCEBN), mainly to China and Malaysia. Robust growth prospects are premised on (i) processing capacity expansion; (ii) market expansion; (iii) supply chain enhancement. Leveraging on the growing demand for EBN attributed to rising disposable income, we expect MYMBN to register net profit of RM6.59m and RM7.27m for FY24 and FY25. BUY with a TP of RM0.27 based on 16x PER over FY24 EPS of 1.7sen, representing a 10% premium on the average PE of its peers on Bursa Malaysia. The premium is justified by MYMBN's first-mover advantage as a Malaysian company granted with GACC license to export RUCEBN to China, the largest consumers of bird's nest in the world.

MYMBN plans to utilize about one-third of its IPO proceeds to expand its processing facility by acquiring a new facility adjoining its existing Headquarter and processing facility in Taman Melaka Raya, Melaka. The new facility will provide an additional built-up area of 25,344 sqft, which will increase the group’s processing floor area by 168% and increase RUCEBN processing capacity by 129% as current capacity utilization has reached 72.80%. The acquisition is expected to be completed by 2HFY23.

The ambitious capacity expansion allows MYMBN to: (i) expand its footprint to fast-growing Vietnam market as Malaysia’s export of bird’s nest to Vietnam surged from a mere 38kg in 2016 to 34,652 kg in 2021; (ii) vertically integrate downstream into the production of own “mf” branded affordable HALAL ready-to-drink bird’s nest products, to fulfill the mass markets vacuum; (iii) tap into processing and sale of Raw clean edible bird’s nest (RCEBN) that offers more growth opportunities, particularly to China via the proposed 80% acquisition in Guangxi Nan Yang for RM0.35m.

MYMBN intends to also utilize part of the IPO proceeds to set up three bird’s nests collection centres in East Malaysia located at Tawau, Kuching and Sibu. MYMBN has also earmarked RM6.6m to purchase raw birds’ nests for RUCEBN, to further improve its competitiveness by offering reasonable prices and good payment terms. Balance sheet is solid with a net cash position of RM9.0m as of the end of FY22.

Source: Rakuten Research - 25 Jul 2023

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