KUALA LUMPUR: Instant beverage premix manufacturer Orgabio Holdings Bhd made its debut on the ACE Market of Bursa Malaysia Securities today, opening at 36 sen per share above its initial public offering (IPO) price of 31 sen per share, chalking up a 5 sen or 16.13% premium.
Following the listing exercise, Orgabio aims to expand its customer base in the direct selling segment and export sales with capacity expansion.
With the proceeds from its listing on the ACE Market, the company will construct a new factory and purchase new machinery to support and enhance the efficiency of its existing manufacturing activities as well as increase its manufacturing capacity.
Its executive deputy chairman Datuk Ean Yong Tin Sin said the new factory will enable the company to customise the design for its manufacturing area which will allow the company to optimise the configuration of its existing machinery and new machinery to be purchased in order to enhance its manufacturing workflow and efficiency.
“Our current business and manufacturing activities are carried out at our Beranang factory. Due to space constraints and the layout of our factory, we are not able to optimise the configuration of our current manufacturing flow whereby machines for different stages of the manufacturing process are not aligned in most efficient manner. Further, we are not able to acquire and place more machines in our Beranang factory which result in us only accepting orders within our current manufacturing capacity.
“The new factory in Semenyih, Selangor which is expected to be operational by August 2023, will increase the company capacity to 230 million sachets per annum,” he added.
As at Dec 31, 2021, Orgabio’s total annual production capacity is 117.2 million. With the capacity expansion, the company intends to further expand its customer base in the direct selling segment by securing more local and overseas direct selling companies through direct approaches and referrals from its existing customers, suppliers and other business associates.
“Direct selling companies are able to provide us with high manufacturing volumes, which will in turn enhance the growth of our financial performance and the sustainability of our group.
“In the past four financial years ended June 30, 2018, 2019, 2020 and 2021, our sales to direct selling companies contributed between 61.4% and 80.6% to our group’s revenue. As at May 17, 2022, we have nine local direct selling companies as our customers,” he further added.
On expanding its export sales, Ean Yong said with Malaysia being one of the major exporters of coffee extracts, it signifies that Malaysian instant coffee premix manufacturers have strong global reputation and recognition, and hence international customers will continue to seek for coffee products from Malaysia.
“We intend to leverage on such global reputation and recognition to further expand our export markets through various marketing activities such as participation in overseas trade fairs and exhibitions, direct approaches and referrals, and digital marketing,” he remarked.
As at Dec 31, 2021, export sales contributed 21.9% of the group’s overall revenue. Orgabio’s export markets include Singapore, China, Papua New Guinea, United Arab Emirates, Hong Kong, Trinidad and Tobago, Japan, Myanmar, Russia, Taiwan, India and Australia.
The company is raising RM29.97 million from the IPO exercise. Of the total IPO proceeds, RM16 million will be used to part finance the construction of its new factory in Semenyih, as it expands its manufacturing capacity to cater for its future business growth.
It will further utilise RM8.14 million of the proceeds for working capital requirements mainly to purchase supplies such as milk powder, creamer, colostrum powder, coffee powder, sugar and sachet foils used for the manufacturing of its products; RM2.23 million to purchase new machinery to support and enhance the efficiency of its existing manufacturing activities while the remaining RM3.6 million for estimated listing expenses.
The IPO has secured traditional healthcare group Hai-O Enterprise Bhd (a wholly owned subsidiary of Main Market-listed BesHom Holdings Bhd) as its cornerstone investor.
Based on the enlarged share capital of 247.9 million shares, Orgabio is expected to have a market capitalisation of RM76.8 million.
M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.
