Its two main lines of business are the supply of animal feed additives and food service equipment, with revenue contribution quite evenly split at 46.7% and 53.3%, respectively, in the financial year ended Dec 31, 2009.
Within the animal feed additives segment, the company expects to ride on an expected wave of livestock farms upgrading to green-farming techniques.
“If you look at the animal feed industry alone, it is true that the market in Malaysia is saturated. But what we are looking at is green farming that is friendly to health and also the environment,” SCC executive director Soh Kian Teck, who oversees this division, told The Edge Financial Daily in an interview.
One of products that SCC distributes is Termin-8 powder and liquid manufactured by Anitox Corporation in the US. Termin-8 is a non-antibiotic additive to animal feed that inhibits the growth of micro-organisms such as bacteria and fungi.
Soh said the Termin-8 system, which is part of a holistic system, promised to increase “feed-conversion-rate” at poultry farms from about 2kg of feed per kg of meat at present to 1.8kg of feed per kg of meat. The meat produced would also be tastier, he said.
SCC Holdings Bhd executive chairman Ben Cher Hwee Seng (middle), executive directors Soh Kian Teck (left), Francis Cher Sew Seng (sixth from left) and Goh Keng Chin (third from right) at the launch of the company's prospectus.
SCC managing director Francis Cher said: “This is without the use of antibiotics which leaves a residue in meat and also the environment through the animal waste. Termin-8 has a half-life of only 90 seconds; so it’s very quickly broken down in the animal and leaves no residue.”
To date, SCC has done about 50 installations of dispensers at its clients’ farms, making up about 10% of its total client list.
The other clients were adopting a wait-and-see attitude, Cher said, but he expected demand to pick up once the results were seen among the early adopters.
The system is audited by Anitox staff every three months. SCC also had technicians on standby to provide repair or replacement services within 24 hours, Cher said.
SCC, which began as a distributor of antibiotics to the farming industry in the 1970s, now distributes solely non-antibiotic additives. It lists 13 other non-antibiotic additives in its initial public offering (IPO) prospectus.
SCC posted a net profit of RM4.9 million on revenue of RM34 million in FY09 giving it a margin of 14% compared with FY08’s profit of RM2.8 million on revenue of RM34.2 million, for an 8% margin.
The sudden jump in margin “mostly comes from the animal health products division”, said its executive director Goh Ah Heng.
Meanwhile, Soh said SCC was also planning to expand its animal feed additive business to Cambodia and Vietnam this year, due to their booming animal feed market.
SCC has also been supplying food services equipment since the 1970s.
It has the exclusive distributorships of several key products including Henny Penny pressure cookers used by KFC restaurants, Bunn coffee machines which is the specified equipment in Starbucks and MacDonald restaurants as well as local kopitiam chains such as Papa Rich and Old Town.
Among the services that SCC provides for clients who purchase Bunn coffee machines is coffee analysis. Clients may have their coffee supply sent to the US to be analysed to determine the ideal temperature and pressure to calibrate the Bunn machines, said SCC general manager Frankie Goh Foi Tee.
Popcorn machine is also a major part of this business segment, with SCC currently supplying machines and corn to Golden Screen Cinemas Sdn Bhd and other cinema chains.
Cher said demand was expected to partly come from hypermarkets increasingly setting up “ready-to-eat” sections in their grocery departments. The company expects the domestic food services industry to grow at an annual rate of 8.3% over the next five years.
It has also begun venturing overseas. It is supplying popcorn machines to a buying agent in Indonesia and is supplying equipment in Brunei and China, but contribution to revenue from these markets is still small at 0.1%, 0.2% and 0.9% respectively. Contribution from Brunei includes animal feed additives.
SCC is scheduled to be listed on Aug 3. It will be making a public issue of 11.1 million new shares of 50 sen each at 78 sen per share.
Out of the 11.1 million IPO shares, the public tranche totals two million shares. A total of 4.3 million shares are reserved for employees, business associates and others who have contributed to the business. The private placement portion consists of 4.8 million shares.
The exercise is expected to raise RM8.7 million, of which RM2 million will be used for capital expenditure within two years, while RM3 million will be spent on the development of the “clean feed” and green solutions programmes over three years and RM2.3 million for working capital over the next two years.
The share offer closes on July 22. SCC has committed to a dividend payout ratio of 35% of net profit.
SCC Holdings Bhd executive chairman Ben Cher Hwee Seng (middle), executive directors Soh Kian Teck (left), Francis Cher Sew Seng (sixth from left) and Goh Keng Chin (third from right) at the launch of the company's prospectus.
SCC managing director Francis Cher said: “This is without the use of antibiotics which leaves a residue in meat and also the environment through the animal waste. Termin-8 has a half-life of only 90 seconds; so it’s very quickly broken down in the animal and leaves no residue.”
To date, SCC has done about 50 installations of dispensers at its clients’ farms, making up about 10% of its total client list.
The other clients were adopting a wait-and-see attitude, Cher said, but he expected demand to pick up once the results were seen among the early adopters.
The system is audited by Anitox staff every three months. SCC also had technicians on standby to provide repair or replacement services within 24 hours, Cher said.
SCC, which began as a distributor of antibiotics to the farming industry in the 1970s, now distributes solely non-antibiotic additives. It lists 13 other non-antibiotic additives in its initial public offering (IPO) prospectus.
SCC posted a net profit of RM4.9 million on revenue of RM34 million in FY09 giving it a margin of 14% compared with FY08’s profit of RM2.8 million on revenue of RM34.2 million, for an 8% margin.
The sudden jump in margin “mostly comes from the animal health products division”, said its executive director Goh Ah Heng.
Meanwhile, Soh said SCC was also planning to expand its animal feed additive business to Cambodia and Vietnam this year, due to their booming animal feed market.
SCC has also been supplying food services equipment since the 1970s.
It has the exclusive distributorships of several key products including Henny Penny pressure cookers used by KFC restaurants, Bunn coffee machines which is the specified equipment in Starbucks and MacDonald restaurants as well as local kopitiam chains such as Papa Rich and Old Town.
Among the services that SCC provides for clients who purchase Bunn coffee machines is coffee analysis. Clients may have their coffee supply sent to the US to be analysed to determine the ideal temperature and pressure to calibrate the Bunn machines, said SCC general manager Frankie Goh Foi Tee.
Popcorn machine is also a major part of this business segment, with SCC currently supplying machines and corn to Golden Screen Cinemas Sdn Bhd and other cinema chains.
Cher said demand was expected to partly come from hypermarkets increasingly setting up “ready-to-eat” sections in their grocery departments. The company expects the domestic food services industry to grow at an annual rate of 8.3% over the next five years.
It has also begun venturing overseas. It is supplying popcorn machines to a buying agent in Indonesia and is supplying equipment in Brunei and China, but contribution to revenue from these markets is still small at 0.1%, 0.2% and 0.9% respectively. Contribution from Brunei includes animal feed additives.
SCC is scheduled to be listed on Aug 3. It will be making a public issue of 11.1 million new shares of 50 sen each at 78 sen per share.
Out of the 11.1 million IPO shares, the public tranche totals two million shares. A total of 4.3 million shares are reserved for employees, business associates and others who have contributed to the business. The private placement portion consists of 4.8 million shares.
The exercise is expected to raise RM8.7 million, of which RM2 million will be used for capital expenditure within two years, while RM3 million will be spent on the development of the “clean feed” and green solutions programmes over three years and RM2.3 million for working capital over the next two years.
The share offer closes on July 22. SCC has committed to a dividend payout ratio of 35% of net profit.
Written by Loong Tse Min
This article appeared in The Edge Financial Daily, July 5, 2010.
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