This article first appeared in The Edge Financial Daily on October 8, 2019

KUALA LUMPUR: Home-grown bakery products manufacturer SDS Group Bhd made a sweet debut on Bursa Malaysia’s Ace Market yesterday, opening at 26 sen or a 13% premium to its issue price of 23 sen, and closed slightly lower at 25.5 sen, valuing the company at RM103.5 million. Some 108.7 million shares were traded.

SDS managing director Tan Kim Seng said the company plans to open eight new food and beverage (F&B) outlets under its retail business in established residential areas in the Klang Valley over two years.

“We expect to open three F&B outlets by October 2020 and the remaining five outlets by October 2021. Currently, SDS Group has 33 F&B outlets in Johor,” he said in a statement.

On its plan to expand into Penang and Kedah, Tan said SDS will set up two new depots in Bukit Mertajam, Penang and Sungai Petani, Kedah and purchase 18 new delivery vehicles.

“To grow our wholesale business for us to extend our bakery products’ reach, we need to widen our distribution network and increase our logistics coverage. The two new depots and 18 new delivery vehicles in Penang and Kedah will enable us to cover the northern region,” he added.

SDS has 19 depots across Peninsular Malaysia and 250 one-tonne delivery vehicles distributing its products to some 10,000 customers, including convenience stores and supermarkets.

Having raised RM23.99 million from the listing, SDS said RM6 million or 25% will be for business expansion for the wholesale and retail channels in the northern and central regions of Peninsular Malaysia, with an additional capacity from its new manufacturing plant in Seremban.

Further, RM7.79 million (32.5%) will be for general working capital requirements, RM7 million (29.2%) to repay bank borrowings and the remaining RM3.2 million (13.3%) to defray listing expenses for the initial public offering (IPO).

M&A Securities Sdn Bhd was the adviser, sponsor, underwriter and placement agent for the IPO.