KUALA LUMPUR (Sept 8): ACE Market-bound SSF Home Group Bhd is setting its initial public offering (IPO) price at 25 sen per share.

The home-grown furniture, home decor and home living product retailer is set to have a market capitalisation of RM200 million upon listing, with an enlarged share capital of 800 million.

This values the company at 12.5 times its price-earnings ratio, based on a net profit of RM16 million for the financial year ended April 30, 2023 (FY2023).

Set to be listed on Oct 12, the group’s IPO comprises a public issuance of 200 million new shares or 25% of its enlarged share capital, and an offer for sale of 24 million existing shares or 3% of the enlarged shares by way of private placement to selected investors.

Out of the 200 million new shares, 40 million shares will be made available to the Malaysian public via balloting, followed by 40 million shares for eligible directors, employees, and persons who have contributed to the group’s success.

Another 20 million shares are earmarked for private placement to selected investors, while the remaining portion of 100 million shares would be allocated to Bumiputera investors as approved by the Ministry of Investment, Trade and Industry.

At 25 sen a share, the group is expected to raise RM50 million, with the bulk of the proceeds going towards the opening of 18 retail outlets over the next three years.

From the total proceeds, RM14.2 million (28.5%) will be used as capital expenditure, followed by RM21.0 million (41.9%) as start-up costs for the set-up of the new retail outlets, while the remaining RM14.8 million (29.6%) will be allocated towards repayment of bank borrowings, marketing activities, general working capital, and to defray listing expenses.

Speaking at the press conference after the prospectus launch, SSF executive director and deputy chief executive officer Lok Kok Khong said that the group will open the 18 new outlets in four regions, namely the central region of Peninsular Malaysia (the Klang Valley), northern region (Kedah, Penang and Perak), and southern region (Negeri Sembilan, Melaka and Johor), and in Sabah and Sarawak.

“This is the strategy now for us to bring more members at different locations. 

“We have customers in rural areas or the smaller towns. So from there (outlets outside the central region), we can increase our revenue, because of the easy access and more presence,” Lok said.

SSF, which has ventured into the retail segment since 1990, currently has 41 outlets, with a total retail space of more than one million sq ft throughout Malaysia, and a warehouse centre in Shah Alam.

On the opening of 18 new outlets within three years, Lok said that the group will kick-start with six new outlets, which are expected to be completed by the end of next year.

Although the world is moving into the digital era, he said the strategy to expand SSF's retail outlets is to reach a large base of customers across a wide geographical area. 

“To provide customers with an attractive retail experience, the group adopts various visual merchandising strategies, such as window displays, house displays, concept displays, and eye-level displays,” he said.

Note that about 90% of the group’s revenue is contributed by its active members. At present, SSF has 89,650 active members.

When asked about the growth target for its active members in the future, Lok explained that the group had always targeted every household in Malaysia.

“Our model is we just want to make sure that we secure as many members as possible, because they are truly contributing to our revenue,” he noted.

For FY2023, SSF’s net profit fell marginally to RM16 million, from RM16.8 million for FY2022, while revenue rose 8.39% to RM174.5 million, from RM161 million a year earlier.

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