ACE Market Listed Orgabio Seeking Export Market For Coffee Mix

Fresh from listing on the ACE Market, instant beverage premix manufacturer Orgabio Holdings Berhad aims to use proceeds from the exercise to expand its customer base in the direct selling segment and export sales.

The company will also be using part of the proceeds to 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. 

Dato’ Ean Yong Tin Sin Executive Deputy Chairman of the company said the new factory will enable Orgabio to customise the design for its manufacturing area which, in turn, will allow it 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 the 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 results 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’s capacity to 230 million sachets per annum. As at 31 December 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 30 June 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 17 May 2022, we have nine local direct selling companies as our customers,” he further added. 

On expanding its export sales, Dato’ 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 added.

As at 31 December 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.

Under the listing exercise, the Company has raised RM29.97 million from its Public Issue of 96.7 million new shares at RM0.31 per share. 

Of the 96.7 million new shares, 12.4 million new shares were made available to the Malaysian public via balloting; 6.2 million new shares for its eligible Directors and employees as well as persons who have contributed to the success of Orgabio Group under Pink Form Allocations while the remaining 78.1 million new shares are earmarked for private placement to selected Bumiputera investors approved by the Ministry of International Trade and Industry and selected investors including its cornerstone investor.  

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 to 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 RM3.60 million for estimated listing expenses. 

The IPO has attracted and secured traditional healthcare group Hai-O Enterprise Berhad (a wholly-owned subsidiary of Main Market-listed BesHom Holdings Berhad) 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. 

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