PETALING JAYA: Frozen seafood processor and trader Ocean Fresh Bhd aims to raise RM14.01mil through its initial public offering (IPO) as the group makes its way towards listing on the ACE Market of Bursa Malaysia.
The IPO entails a public issuance of 50.05 million new ordinary shares priced at 28 sen each.
Ocean Fresh is expected to have a market capitalisation of RM58.84mil upon listing, based on an enlarged issued capital of 210.15 million shares.
From the new shares, 37.83 million will be allocated for selected investors, 10.51 million for the Malaysian public and the remaining 1.71 million will be set aside for eligible parties.
Executive director Teo Chee Han said 57.09% of the proceeds, or RM8mil, will be used as capital expenditure for its new cold storage facility.
The remainder of the proceeds will be allocated towards working capital requirements and estimated listing expenses of RM2.51mil and RM3.5mil, respectively.
According to Teo, the group’s current cold room located at its headquarters and processing facility in Kuantan, Pahang, has reached a utilisation rate of 99.94%.
“To cater to business growth, we plan to set up a new cold storage facility that will have six cold rooms and a loading bay,” he said after Ocean Fresh’s prospectus launch yesterday.
The new cold storage facility is expected to have a total aggregate built-up area of 3,747 sq m, raising Ocean Fresh’s capacity from 1,700 tonnes to 4,700 tonnes.
Executive director and head of operations Kee Wan Chum said the group is looking to grow its frozen seafood exports business, particularly in China, as well as venturing into processing and trading of dried seafood products.
“China is actually one of our biggest markets and it has a big population, so we plan to have more collaborations and direct business with China importers,” she said.
She said China contributed about 33% to the groups’ revenue and Ocean Fresh expects this to rise once it has strengthened its presence in that country.
It was also noted that demand from clients in China is one of the reasons behind the group’s plan to venture into the dried seafood market.
Additionally, Ocean Fresh said dried seafood products have much lower storage and transportation costs as compared to frozen seafood products.
As the majority of its business comes from exporting products, by about 80% of total revenue, Kee said the group is subject to challenges related to import rules and regulations.
“Because most country’s import rules are getting stricter, we always have to keep up and follow the latest regulations,” she said.
Kee said the strengthening of the US dollars and the freezing of foreign workers by the government will not have a significant impact on the group.
When asked about the Red Sea crisis, she stated that fluctuation in shipping costs have led Ocean Fresh to pass the additional costs to its customers.
“But since we do not catch our own seafood, the issue of making losses is quite remote because we are doing daily purchases.
“If the selling price of the day is not as good, we will stock up in our cold room. But once the season is good and we purchase more, then we can capitalise on the margins,” she added.
Ocean Fresh is set to be listed on July 4, 2024. Applications for Ocean Fresh’s IPO is now open and will close on June 20, 2024.
