AS 24-hour convenience store chain KK Super Mart is embroiled in the socks controversy, its ‘sisterly competitor’ 99 Speed Mart Retail Holdings Bhd (99SM) helmed by founder Lee Thiam Wah - renowned for his great entrepreneurial prowess despite his bodily disability - is one step closer to becoming a public listed company (PLC).

Boasting 2,542 outlets at the time of writing, the grocery chain operator has filed a draft prospectus as a precursor to its initial public offering (IPO) that will see the Lee family letting go of 17% interest upon listing on Bursa Malaysia’s Main Market in its quest to raise as much as RM1.5 bil from the capital market to fund its expansion.

As reported by The Edge, the draft prospectus filed with Securities Commission Malaysia (SC) on March 11 also proposes a minimum public shareholding spread of 15% versus the usual 25% as required by Bursa Malaysia.

As the listing exercise entails ‘big chunks of figures’ which can be confusing or is time consuming to digest especially by retail investors, concise financial market provider The Coffee Break (@BreakMyCoffee) has laid out six interesting facts that investors should know about 99SM.

Here goes:

(1) 99SM is Malaysia’s largest FMCG (fast moving consumer goods) retailer

It commands 37.9% of the mini-market industry and 11.1% of the grocery-based retail industry in 2022 based on revenue.

(2) 99SM’s revenue more than doubled the second-largest player

Its financial year (FY) 2020-2022 and 9M Sept 30, 2023 financial highlights (below) show that SM99’s revenue more than doubled that of the second-largest player.

(3) 99SM does not make its net profits from the sale of goods but …

Zoom in a bit deeper, one will find out that 99SM does not make its net profits from the sale of goods but rather from “other operating income”. Gross profits alone are insufficient to cover its overheads. This income includes display, distribution fee, etc.

(4) 99SM targets 3k outlets by end-FY2025

99SM has 2,542 outlets nationwide currently and aims to hit 3,000 by end-FY2025 (250 new outlets per year).

In its FY2022, an average outlet recorded RM10,400 in sales per day with 440 transactions at an average ticket size of RM23.59.

(5) Staggering RM1.3 bil in dividends paid to two shareholders between FY2020-FY2023 (till Sept 30, 2023)

The dividends paid to its owners (grand total of two shareholders) over the recent four FYs is “wild” - totalling RM1.31 bil.

In FY2023 alone (until Sept 30, 2023), RM490.5 mil was declared, hence begging the question, why list?

(6) Figures not final

Since the prospectus is just a draft, valuation figures and share price are subject to last-minute changes. A total 1.428 bil shares will be floated, of which 71.9% will be offer for sale (a.k.a. cash out).

It was previously reported that the company aims to raise RM1.5 bil, but this remains unconfirmed.

To cut a long story short about 99SM, The Malaysianist portal owner Emmanuel Samarathisa has described Lee as “a whale in his own right” for owning some 2,500 outlets of the grocery chain as well as other Malaysia’s well-known brands in addition to controlling a supermarket in Singapore. - March 18, 2024

https://focusmalaysia.my/from-a-humble-start-99-speedmart-is-today-malaysias-largest-fast-moving-consumer-goods-player/