KUALA LUMPUR (July 25): Newly listed MYMBN Bhd said the demand for bird's nest will remain unaffected by China's slowing economy and the US-China trade tension, as its consumption is a deep-rooted cultural tradition spanning over many centuries.
Although bird's nest products are not recession-proof, like many other products, MYMBN executive director and chief executive officer Lavernt Chen Vun Wo believes bird's nest consumption will remain “healthy” and “not be impacted directly by the market influence”.
“People may consume (bird's nest) less but there will always be people who haven’t consumed and will want to consume. And today, you don't have [any] sudden supply of bird's nests from one other location that we don’t know,” Chen said in a press conference on Tuesday (July 25) following the group’s listing ceremony.
He said that while the supply of bird's nests is available in Southeast Asia, namely Indonesia, Malaysia, Vietnam and Thailand, production is not as consistent in Vietnam and Thailand.
This leaves only two major producers — Indonesia and Malaysia — to supply for the China market, hence giving MYMBN the advantage to grow in the market.
He also shared that bird's nest prices are expected to stay consistent at the current average selling price for raw unclean edible bird’s nests (RUCEBN) of RM3,800 to RM5,200 per kg, with caveats on supply and demand.
Chen, recognising China's massive population of 1.4 billion, believes that the tensions between the US and China will not significantly impact the consumption of bird's nests in China.
While acknowledging that these geopolitical tensions may have some effect on the economy, Chen maintains that people's belief and continued consumption of bird's nests will remain steadfast.
Chen’s comment mirrors the group’s plan to further expand into the China market through its acquisition of an 80% stake in a Chinese company in Qinzhou, Guangxi, 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 raw clean edible bird’s nests (RCEBN) to be sold in China.
The stake acquisition 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. However, he said there is no profit guarantee resulting from the acquisition as of yet.
On top of China, MYMBN also seeks to break into the Vietnam market to reduce the group’s reliance on a single market. MYMBN had commenced shipment of RUCEBN to Vietnam in April this year.
Meanwhile, in addition to the group’s expansion plans, MYMBN aims to venture into the halal ready-to-drink bird’s nest products market by coming out with its own brand — MF Mom’s Favourite — which is set to be rolled out in the next 24 months.
Consequently, when asked about the financial prospects for the upcoming months, MYMBN’s financial controller Wang Heong Ying forecast growth of around 10% to 12% in the group's revenue, with net profit growing in line with the revenue.
“We will try to expand our profit margin but in terms of [current] gross profit, [margin is] around 14%, net profit [margin] is around 7%,” Wang told The Edge at the sidelines.
Chen further commented that MYMBN has no upcoming expansion plans apart from the group’s aim to reinforce its footprint in China and Vietnam, as well as venture into new products locally, saying that “this will keep us busy for the next half of the year”.
Lastly, MYMBN said the group aims to transfer its listing to the Main Market of Bursa Malaysia, though that will depend on the performance of the market, with the group “working hard to ensure it has good deliverables to shareholders and stakeholders”, given its young age of six years since being established in 2017.
The group also has not formed any dividend policy and has not ruled out the possibility of creating one in the future “when [MYMBN] is more mature”.
At the midday break, MYMBN was the second most active stock with 96.25 million shares traded, while its share price stood at 27.5 sen.