MELAKA (June 30): Melaka-based MYMBN Bhd, en route to be the first bird’s nest processor to list on the Ace Market of Bursa Malaysia on July 25 this year, is banking on bright growth prospects in the edible bird’s nest industry by expanding its offerings in the industry’s value chain, following its initial public offering (IPO) next month.

The group is involved in the processing and sale of raw unclean edible bird’s nests (RUCEBN) to both local and China markets. Its core business is sitting in the midstream of the edible bird’s nest industry value chain.

The group’s expansion plan is to include the processing and sale of raw clean edible bird’s nests (RCEBN), which sits in the midstream of the edible bird's nest industry value chain, as well as a venture into the halal ready-to-drink bird’s nest products market by coming out with its own brand, which sits downstream.

RUCEBN only involves certain processing procedures such as sorting, separating, drying, weighing, grading and packing, while RCEBN is a product step after RUCEBN. RCEBN products are subject to a more comprehensive and tedious handling and cleaning process to reduce biosecurity risks.

The high selling price is a major factor to expand its offerings to include RCEBN, said MYMBN chief executive officer and executive director Lavernt Chen Vun Wo.

“RCEBN products fetch higher selling prices. The difference between the selling price of RUCEBN and RCEBN is about RM2,000 and RM3,000. The average selling price (ASP) of RCEBN ranges between RM7,000 and RM8,000 per kg, higher than RUCEBN’s ASP of around RM4,500 per kg,” he told The Edge in a recent interview here.

The group’s expansion into RCEBN products will be done by purchasing an 80% stake in a Chinese company which has received the General Administration of Customs China's (GACC) approval — the mandatory food certification for food product imports for the Chinese market — to import RUCEBN to China and then process it into RCEBN to be sold there.

“The Chinese company serves two purposes — it can process RUCEBN and gives us a direct distribution channel in China to distribute RUCEBN. We can have wider distribution without having to just rely on our [other importing] customers [in China],” Chen said.  

The stake acquisition in the Chinese company is slated to be completed in the second half of this year. Chen expects the company will then take about 20% of MYMBN's RUCEBN total processing capacity of 32,256kg per year.

MYMBN's IPO exercise entails a public issue of 98 million new shares at an issue price of 21 sen each, which will raise RM20.58 million in proceeds.

Of the total, RM8.93 million has been earmarked for business expansion. This comprises RM1.25 million for the expansion into the processing and sale of RCEBN, RM2.8 million for the purchase of a new facility, RM3.2 million for the renovation and fit works for the new facility and RM1.68 million for setting up three bird’s nests collection centres in Sabah and Sarawak.  

Another RM6.6 million has been allocated for the purchase of raw bird’s nests for RUCEBN, RM2.05 million for working capital and the remaining RM3 million to defray listing expenses.

Chen noted that the facility expansion will be done via the acquisition of a new facility adjoining its existing facility. The expansion also serves the purpose of housing the product display store for its halal ready-to-drink bird’s nest products in the future.

The expansion of the facility will see its annual processing capacity for RUCEBN more than double to 73,728kg, from 32,256kg currently, and storage capacity increase to 4,608kg from 1,848kg.

The group’s processing capacity utilisation rate stood at 72.8% as at May 31, 2023.

The planned expansion also caters to the future growth demand in new markets. According to the group, Vietnam is its new international market in a bid to reduce its reliance on the China market.

The group commenced its shipment of RUCEBN to Vietnam in April this year. Chen said Vietnam’s consumer demand for edible bird's nests is expected to increase in tandem with a rapidly rising middle-income class and increasing disposable income.

This was evidenced by Malaysia's exports of bird’s nests to Vietnam which expanded from approximately 38kg in 2016 to 34,652kg in 2021, representing a compound annual growth rate of 290.8%, Chen added.

MYMBN is launching its prospectus for its IPO on Friday (June 30).