Orgabio debuted at 36 sen in ACE Market

The newly debut stock is among the top traded counter on Bursa Malaysia as it saw some 4.8m shares trading hands at the opening bell

by TMR 

ORGABIO Holdings Bhd aims to expand its customer base in the direct selling segment and export sales by increasing its manufacturing capacity.

The instant beverage premix manufacturer made its debut on the ACE Market today at 36 sen a share, which represents a five sen premium to its IPO price.

The stock saw 4.82 million shares trading hands at the opening bell, making it the top traded counter on Bursa Malaysia.

Of the total IPO proceeds, RM16 million will be used to partly finance the construction of its new factory in Semenyih, as it expands its capacity to cater for its future business growth.

With the proceeds from its listing, 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.

“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 the most efficient manner,” Orgabio executive deputy chairman Datuk Ean Yong Tin Sin said.

“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 sachets.

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.

Ean Yong added that 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, 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 said.

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.

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.  

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 attracted and secured traditional healthcare group Hai-O Enterprise Bhd (a wholly-owned subsidiary of Main Market-listed BesHom Holdings Bhd) as its cornerstone investor.