IPO ... SCC Holding Bhd

Animal feed additive and food service equipment supplier SCC Holdings Bhd plans to expand regionally over the next three years as well as enter two new market segments.

The expansion plans would involve both the company’s core businesses of trading in animal health products and trading of food service equipment.

It was already in talks with one of its principals on expanding its distributorship in Vietnam. Another new market it would be looking at is Cambodia. SCC also intends to further expand its presence in its existing markets such as Indonesia, Brunei and China, which contributed 0.1%, 0.2% and 0.9% to group revenue in the financial year ended Dec 31, 2009 (FY09). Its business now is predominantly within Malaysia, contributing 98.8% to revenue in FY09.

SCC also aims to diversify into new business segments in aquaculture and also green solutions for feed mills. Cher said SCC had been conducting test programmes in these two segments to provide solutions for, among other things, problems of fish suffocation in aquaculture and energy usage in feed milling.

SCC now has a share of 16.9% of the domestic non-antibiotic feed additives market and 6.2% of the food services equipment market.

Major customers of its food services equipment include GCH Retail (Malaysia) Sdn Bhd, Golden Screen Cinema Sdn Bhd and KFC Manufacturing Sdn Bhd, while major clients for its animal feeds additives include Gymtech Feedmill (M) Sdn Bhd and Charoen Pokhand Jaya Farm (M) Sdn Bhd.

The breakdown of the revenue contribution from the two core businesses is 46.7% from animal feed additives and 53.3% from food services equipment for FY09.

For FY09, SCC posted a net profit of RM4.9 million on the back of revenue of RM34 million compared with FY08’s RM2.8 million and RM34.2 million, respectively.

It will be making a public issue of 11.1 million new shares of 50 sen each at 78 sen per share. This represents about 26% of the company’s enlarged paid-up capital. Out of the 11.1 million IPO shares, the public tranche for application by the public 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.

It is expected to raise RM8.7 million from the IPO, 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 remaining RM1.38 million will be used to defray listing expenses.