KUALA LUMPUR (Aug 13): Cooking oil distributor Sik Cheong Bhd (KL:SCB) has implemented a strategy to minimise its exposure to crude palm oil (CPO) price fluctuations by maintaining a swift inventory turnover, according to managing director Wong Hing Ngiap.
The company, which made its debut on Bursa Malaysia’s ACE Market on Tuesday, specialises in the repackaging, marketing and distribution of refined, bleached, and deodorised (RBD) palm olein oil, sourced from local palm refineries. Given the direct link between RBD palm olein prices and the cost of CPO, Sik Cheong is highly sensitive to market volatility.
The company offers a range of RBD palm oil olein products, including cooking oil under its own brands “Sawit Emas” and “Vitamas”, alongside unbranded cooking oil options, and lamp oil under the brand “Pingat Emas”.
“Rising average CPO prices result in increased cost of sales for the group. However, we have the flexibility to adjust our selling prices to align with higher CPO prices,” Wong told reporters on Tuesday, following the group’s listing ceremony.
“To mitigate risks due to CPO price fluctuations, we maintain a short turnover period, typically between five- to seven days,” he added.
Benchmark palm oil futures for November delivery on the Bursa Malaysia Derivatives Exchange declined 6% to RM3,670 at the time of writing.
Sik Cheong’s cooking oil products are distributed to customers throughout Kuala Lumpur and Selangor, which both contributed about 97.7% of group revenue for the financial year ended March 31, 2024 (FY2024). The remaining 2.3% was contributed by Negeri Sembilan, Johor, Putrajaya, Pahang, Perak, Sarawak, Melaka and Terengganu.
Wong said there is “no plan at the moment” to export the company’s products in the near future.
For FY2024, the group’s net profit increased by 5% to RM6.3 million, from RM6 million a year earlier, as revenue rose slightly to RM79.6 million, from RM78.2 million.