CEKD and Farm Fresh IPO
The recent price trend of CEKD Berhad, listed on September 29, has been quite impressive. Initially, it dropped from RM0.60 on the day of listing to the lowest of RM0.515 last week. However, it surged to RM0.995 over the following five days and has continued to rise, reaching RM1.07 today.
If you compare this with Ramssol Group Berhad’s stock price trend after its listing, you’ll find the price movements of both companies to be somewhat similar.
In addition to CEKD Berhad's stellar performance last week, another highly anticipated IPO is set to debut on Bursa Malaysia’s main board—Farm Fresh Berhad, a vertically integrated dairy farming company. This IPO could be comparable to CTOS Digital and MRDIY.
According to "The Edge," Farm Fresh Berhad's market capitalisation is expected to exceed RM2 billion, matching the cap size of CTOS Digital when it filed its draft prospectus.
However, as only the draft of Farm Fresh's IPO prospectus is available on the SC's official website, the exact listing date remains unclear.
I estimate it could be listed by the first half of 2022.
Since Farm Fresh’s IPO is still several months away, let’s shift focus to another company likely to list on the Ace Market soon: Orgabio Holdings Berhad (康泰控股).
Orgabio -Holdings Berhad Background
Orgabio Holdings Berhad, according to its IPO prospectus, is an instant beverage premix manufacturer with two main businesses:
- Providing premix manufacturing services to third-party brand owners
- and selling house-brand instant beverage premixes.
The company offers a variety of products, including three-in-one coffee, chocolate premix, oatmeal, and food supplements under its brands Everyday and BrogaHill.
Orgabio IPO Details
The IPO details for Orgabio Holdings Berhad are summarized from the term sheet document released by the Malaysian Ministry of International Trade and Industry (MITI).
After its listing on the Ace Market, Orgabio Holdings Berhad will have an enlarged share capital of 247.868 million shares, which includes the issuance of 96.668 million new shares (39% of enlarged share capital). There will be no offer for sale to selected investors through private placement.
The public issue of 96,668,000 new ordinary shares in CEKD is structured as follows:
- 12,393,400 new shares for the Malaysian public
- 6,196,700 new shares for eligible directors, employees, and contributors to the group's success
- 30,077,900 new shares available for selected investors via private placement
- 78,077,900 new shares for selected Bumiputera investors approved by MITI through private placement
- 16,110,900 new shares allocated to the cornerstone investor (Hai-O Enterprise Berhad)
Multiplying the enlarged share capital by the Orgabio IPO price suggests that the market capitalization of Orgabio Holdings Berhad is approximately RM 59.5 million, with a PE multiple of 10.57.
While Orgabio's indicative PE ratio is slightly lower than other IPOs, it remains within the Ace Market's typical PE ratio range of 10 to 20.
Orgabio Shareholding Structure
The shareholding structure of Orgabio post-IPO is as follows:
- Listing Company - Hai-O Enterprise Berhad: 12.5%
- Family Members (Directors, Employees, etc.): 0.95%
It is essential to understand the company structure of Orgabio's major shareholder, Ean Yong & Sons, as Orgabio is a family business (similar to CEKD Berhad) prior to going public.
Key Family Members in Orgabio
Dato’ Ean Yong Tin Sin and his wife, Datin Lai You Mooi, hold 31% and 20% of shares, respectively. All family members, except the youngest daughter, currently occupy significant positions within the Orgabio Group.
- Dato’ Ean Yong Tin Sin: Deputy Executive Director
- Ean Yong Hien Voon (eldest son): 16% shares, CEO and Executive Director
- Ean Yong Hen Loen (youngest son): 3% shares, Executive Director
- Datin Lai You Mooi: Director
- Ean Yong Hien Chal (second son): Manager of Production Department
- Ean Yong Han Khian (third son): Manager of Logistics & Sales Department
- Youngest daughter: Former Compliance Manager (2017-August 2019), now Deputy Manager of HLB Compliance Department
Utilization of IPO Proceeds
Orgabio plans to allocate the funds raised from the IPO for various purposes, including constructing a new factory, repaying bank loans, purchasing equipment, and covering listing expenses. However, the draft prospectus does not specify the percentage for each allocation.
To address the decline in utilization at Orgabio's Beranang factory and accommodate future orders, the company purchased freehold industrial land in Semenyih in October 2017, intending to transfer production capacity to the new factory.
Currently in the construction phase, the new plant is projected to be completed by March 2023, with operations commencing in August 2023.
Some IPO funds will also be allocated for repaying loans tied to the factory's construction, aiming to reduce interest expenses.
Additionally, Orgabio intends to acquire one Intermediate Bulk Container blending system and two filling machines for the new plant in Semenyih. Remaining IPO funds will be utilized to purchase raw materials, including milk powder, coffee powder, sugar, creamer, and will also cover listing fees.
Orgabio Dividend Policy
Orgabio does not have a formal dividend policy, meaning that dividend distribution after listing will depend on the company’s financial performance and decisions made by the management.
Conclusion
This concludes an overview of the upcoming Orgabio Holdings Berhad IPO. In the months of November and December, several companies are expected to go public, including
furniture player Ecomate, MTT Shipping & Logistics, Swift Haulage Berhad, and the home-grown electrical appliance store SenHeng New Retail Berhad.
Moreover, another technology stock IPO, Aurelius Technologies Berhad, may also be launched in December 2021.
For further information on how to apply for an IPO, along with tips and tricks for the application process, please refer to the following label:
IPO INITAL PUBLIC OFFERING
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