Sik Cheong surges 33% on listing day

Monday 16 Dec 2024

KUALA LUMPUR (Aug 13): Cooking oil distributor Sik Cheong Bhd (KL:SCB) closed 33% higher on its ACE Market debut.

On Tuesday, the counter began trading at 50 sen, a surge of 85.2% against its initial public offering (IPO) price of 27 sen. Its share prices went as high as 50.5 sen before closing the day at 36 sen — still up nine sen or 33.33% from its IPO price.

At the closing price of 36 sen, Sik Cheong is valued at RM95.76 million. The counter was the third most actively traded stock on Bursa Malaysia, with 128.52 million shares changing hands.

At its IPO price of 27 sen, the company is valued at a price-earnings ratio of 11.35 times its net profit for the financial year ended March 31, 2024 (FY2024) of RM6.33 million or 2.38 sen basic earnings per share.

Of the 22 stocks debuted on the ACE Market this year, Sik Cheong ranked 12th for the best-performing IPO on its listing day.

Leading the list was UUE Holdings Bhd (KL:UUE) with an impressive 189.58% gain, followed by Ocean Fresh Bhd (KL:OFB) at 175% and Go Hub Capital Bhd (KL:GOHUB) with a 171.43% gain.

Other IPOs were Kucingko Bhd (KL:KUCINGKO) with a 90% gain, KJTS Group Bhd (KL:KJTS), which surged 85.19%, Agricore CS Holdings Bhd (KL:AGRICOR), which climbed 75%, Farm Price Holdings Bhd (KL:FPHB), which jumped 70.83%, BWYS Group Bhd (KL:BWYS), which rose 59.09%, Kawan Renergy Bhd (KL:KENERGY), which gained 55%, Zantat Holdings Bhd (KL:ZANTAT), which increased 50% and Topmix Bhd (KL:TOPMIX), which went up 35.48%.

Sik Cheong is principally involved in the repackaging, marketing and distribution of refined, bleached and deodorised (RBD) palm olein oil products, comprising mainly cooking oil which is sold under its in-house brands Sawit Emas and Vitamas.

“We are truly grateful for the market's confidence as Sik Cheong begins a new journey as a publicly-listed company. This significant milestone underscores over three decades of our expertise in the RBD palm olein oil repackaging industry, from monitoring crude palm oil prices to efficient procurement, inventory management, and logistics planning,” said its managing director Wong Hing Ngiap in a statement.

According to Wong, the Malaysian RBD palm olein repackaging industry is poised to see a compounded annual growth rate (CAGR) of 20.9% to RM12.8 billion in 2026, fuelled by continuous consumer demand, as well as growth in demand from hotel, restaurant and catering operators.

“While palm olein oil is the most produced vegetable oil in the country, soybean oil holds the third position, indicating substantial market potential. Recognising this, Sik Cheong will expand the product range to include high oleic soybean oil, offering a cost-effective option suitable for most types of cooking methods,” he added.

Sik Cheong’s IPO was met with phenomenal demand, with the public oversubscribed by 213.53 times.

Under the public issue of 66 million new shares, 13.3 million was made available to the Malaysian public, four million to eligible directors, employees and persons who have contributed to the success of Sik Cheong, while 48.7 million shares were reserved for private placement to select investors.

Of the proceeds of RM17.82 million from new shares issuance, Sik Cheong allocated RM7.18 million for the expansion of its packaging facility, RM5.95 million for working capital, RM3.8 million for estimated listing expenses, and the remaining RM890,000 for the purchase of new delivery trucks.

The IPO also offered 20 million existing shares through private placement to select investors, which grossed RM5.4 million, which went entirely to the selling shareholders Wong Hing Ngiap and his brother Wong Hin Loong, who is an executive director of the company.

The Wong brothers co-founded Sik Cheong, a partnership business registered in 1967, involved in the retail and wholesale of sundry goods. They began delivery of RBD palm olein oil products to customers in 1997, while the partnership ceased its business in May 2018.

TA Securities is the principal adviser, sponsor, sole underwriter and placement agent for the company’s IPO.

Edited ByIntan Farhana

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