KUALA LUMPUR: Sik Cheong Bhd, a cooking oil distributor en route to ACE Market listing, plans to expand its product range to include high oleic soybean oil.

The company, which mainly repackages refined, bleached and deodorised (RBD) palm olein, has been getting enquiries from existing customers interested in the product, said Abdul Muiz Mustafa, senior manager at TA Securities advising and managing Sik Cheong’s initial public offering (IPO).

Palm kernel oil is more suited for confectionery and pastries, while Sik Cheong’s customers are seeking cooking oil that is “more compatible with general use”, he said at a press conference in conjunction with the launch of its IPO prospectus.

“This will allow them to cross-sell the product to retailers and wholesalers, and meet the demand from food manufacturers for a healthier cooking option," he said. Further, soybean oil does not require a different set of handling procedures than palm oil, Abdul Muiz added.

Sik Cheong’s IPO — priced at 27 sen apiece — involves the public issuance of 66 million new shares, which would raise RM17.82 million for the company, and an offer for sale of 20 million existing shares.

The company has set aside 40% of the proceeds to build a new packaging facility to accommodate future expansion of repackaged RBD palm olein oil business and the new venture into high oleic soybean oil, which will require additional space.

Upon completion, the company’s total operational space will increase by 88.1% to about 38,525 sq ft. The company will also buy new machinery and equipment for the repackaging of high oleic soybean oil and RBD palm olein oil products.

Currently, utilisation rate ranges from 20% to 70% depending on the packaging sizes of the products, said Abdul Muiz. “However, the primary constraint is the floor space, which is operating at nearly 95% capacity,” he said.

Sik Cheong’s production lines can handle up to 49,303 metric tonnes per year of RBD palm olein and the company is planning an annual capacity of 9,470 metric tonnes for high oleic soybean oil.

https://theedgemalaysia.com/node/719654

Sumber : The Edge Malaysia