Investment & Market Trends

KUALA LUMPUR: Sik Cheong Berhad (“Sik Cheong” or “熾昌有限公司”), a company specializing in the repackaging, marketing, and distribution of RBD palm olein oil, has entered into an underwriting agreement with TA Securities Holdings Berhad (“TA Securities”) for its forthcoming initial public offering (IPO) on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”). Sik Cheong’s IPO will involve a public issuance of 66.0 million new ordinary shares, representing 24.8% of its enlarged share capital, along with an offer for sale of 20.0 million existing shares, or 7.5% of its enlarged share capital, via private placement to selected investors. Of the 66.0 million new shares, 13.3 million will be available to the Malaysian public through balloting, 4.0 million shares will be allocated to eligible directors, employees, and contributors to Sik Cheong’s success (“Pink Form Allocations”), and the remaining 48.7 million shares will be reserved for private placement to selected investors. Under the underwriting agreement, TA Securities will underwrite 17.3 million new shares allocated to the Malaysian public and Pink Form Allocations. Sik Cheong, through its subsidiaries (collectively referred to as the “Group”), focuses on the repackaging, marketing, and distribution of RBD palm olein oil, a refined, bleached, and deodorized form of palm oil. The Group also trades third-party products, primarily margarine, based on customer requests. RBD palm olein oil products are the primary revenue driver for Sik Cheong. These products, including cooking oil sold under the in-house brands “Sawit Emas” and “Vitamas,” as well as unbranded options, serve both commercial and household markets. Sik Cheong boasts a customer base of over 500 annual clients, including retailers, wholesalers, hotel and restaurant operators, and food manufacturers. Retail outlets such as wholesale centers, hypermarkets, and supermarkets further extend the reach of Sik Cheong’s products to end consumers. Additionally, the Group markets lamp oil under the “Pingat Emas” brand. Sik Cheong’s Managing Director, Mr. Wong Hing Ngiap (黄興業), commented, “Sik Cheong operates in a sustainable sector, with RBD palm olein cooking oil being a crucial ingredient in daily food preparation. It offers a cost-effective solution compared to alternatives, making it one of the most consumed cooking oils. With over thirty years of experience and a solid presence in Klang Valley, we are poised for the next phase of growth. We are excited to sign this Underwriting Agreement with TA Securities, marking a significant step towards our listing on the ACE Market of Bursa Securities. This IPO will enhance our corporate profile, financial flexibility, and open new growth opportunities.” Mr. Wong added, “We take pride in catering to diverse customer needs and industry requirements with various packaging sizes for both household and commercial use. Our commitment to reliable and prompt delivery, within 3 working days, ensures customer confidence and fosters long-lasting business relationships.” Sik Cheong emphasizes product quality and safety, demonstrated by its MeSTI, HALAL, HACCP (MS 1480: 2019), and ISO 22000: 2018 certifications. These accreditations reflect the company’s adherence to rigorous cleanliness and preparation standards crucial for maintaining high quality in the food industry. Looking forward, the Group plans to expand its product range to include high oleic soybean oil, a versatile and cost-effective option with a mild flavor that meets the demand for healthier edible oils. The Group also aims to extend its geographical reach beyond Kuala Lumpur and Selangor to neighboring states such as Perak, Negeri Sembilan, Melaka, and Pahang to capture a larger market share. Sik Cheong is set to be listed on the ACE Market of Bursa Securities by the third quarter of 2024, with TA Securities serving as the Principal Adviser, Sponsor, Sole Underwriter, and Placement Agent for the IPO.

Earlier in April, the Employees Provident Fund (EPF) made an announcement that ended up being very much talked about, especially among working adults: the introduction of Account 3, also known as the Flexible Account (Akaun Fleksibel). This new account is the result of restructuring of the original accounts of EPF members under the age of 55, in addition to their Account 1 or Retirement Account (Akaun Persaraan) and their Account 2 or Prosperity Account (Akaun Sejahtera). With the Flexible Account, EPF members will be given the flexibility of better managing their short-term financial needs, where savings in the new account can be withdrawn at any time, unlike the other 2 accounts. According to EPF Chief Executive Officer, Ahmad Zuqarnain Onn, the account holders have the option to make use of the Flexible Account or not. If they do, they will be provided with a one-time option to transfer part of their savings from Account 2 to Account 3 between 11 May and 31 August 2024, as the Flexible Account will have zero balance at the start. Moving forward, any future contributions made by the EPF members will be divided into the 3 separate accounts – 75% into Account 1, 15% into Account 2 and 10% into Account 3 – whereas previously, the contributions were only divided between the 2 accounts (70% to Account 1 and 30% to Account 2). “We encourage people not to (opt-in) because it is important to save for old age, but we understand that flexibility is desired and from time to time, you would need access to your savings to pay for unexpected expenses,” Zulqarnain said. He also mentioned that the initiative is not just due to EPF’s response to current needs, but it is also a proactive step to help members facing the challenging job landscape and demographics of the population. According to him, if each one of the 16.07 million EPF members were to opt into Account 3, the total funds being moved into Flexible Accounts would amount to RM57 billion, with about RM25 billion of the amount expected to be withdrawn within the first year. Meanwhile, the total withdrawals made during the Covid-19 pandemic amounted to RM145 billion. “The current scenario is much different from during the pandemic and our portfolio is now much bigger. Hence, the impact of withdrawals through the new account is expected to be muted,” Zulqarnain said. He also mentioned that dividends will remain the same across all 3 accounts, but this could change in the future as liquid assets do not attract higher interest rates or dividends. Account 3: Good Call or No? Even before the Flexible Account went live on 11 May 2024, some economists and experts have been voicing out their mixed opinions on the matter – with some saying that it is a good idea while others are disagreeing. Hijrah Wealth Management Sdn Bhd Founder and Principal Consultant Rohani Mohd Shahir said that while a reformation to meet the request of some contributors may not be suitable for everyone, the option to opt in was a welcomed one. She said that Account 3 could be beneficial for contributors to withdraw funds for emergencies without resorting to other avenues such as loan sharks. However, contributors must have the discipline to not misuse this facility for other purposes other than emergencies as doing so would be detrimental to their future retirement needs. Some experts even warned that the risks of misusing the Flexible Account far outweigh the benefits. Institute of Islamic Understanding Malaysia (IKIM) Senior Fellow and Director, Muhammad Hisyam Mohamad said that instead of resorting to impulsive withdrawals, contributors should consider it as a contingency. “What’s worrying is that the withdrawals are made for the sake of non-urgent matters such as buying goods, decorating the house, buying car accessories or keeping up with fashion trends. “In other words, if a contributor makes frequent withdrawals through Account 3, 10% of their savings will be depleted before retirement,” he noted, adding that contributors should not lose sight of the consequences. He stated that Malaysia will experience an ageing population by 2030 where the percentage of people aged 60 years and over will reach 15.3% of the total population and at the same time, costs of living will also escalate by then. Hisyam reminded that during the pandemic, contributors who were desperate to make ends meet fully utilised the government’s decision to allow for 4 types of withdrawals to be made from their EPF savings via i-Lestari, i-Sinar, i-Citra and Special Withdrawal. As a result, a number of active contributors who met the basic savings benchmark of RM240,000 by the age of 55, was also reduced. According to the Ministry of Finance, a total of 6.3 million EPF members (48%) under 55 years old has savings of less than RM10,000 in their accounts as of 30 September 2023. This indirectly signals that if the issue is not addressed, most contributors would be in dire financial straits during retirement and the savings will not be sufficient to meet their needs for 10 to 20 years after their retirement. In regard to whether this initiative could help in addressing the cost of living issue among the people, Hisyam said that it would depend on the members’ monthly contribution. With a larger contribution in Account 2, members might be able to cope with the cost of living, given the higher disposable income for spending. “In Malaysia, employees contribute up to 11% of their monthly salary to EPF while employers need to contribute up to 13% of the employees’ salary. “However, for a low-wage employee who receives a minimum salary of RM1,500, for example, the combined monthly contribution may be around RM345, with only RM34.50 going into Account 3. “If wages received by workers remain low and do not rise in tandem with costs of living, the pressure will be on affected individuals who will not be able to improve their quality of life,” he explained. Many Still Wary of Flexible Account

KUALA LUMPUR: Sustainable property development firm Proven Land Sdn Bhd has entered into an agreement to acquire a 20% stake in Sunrise Charm Sdn Bhd, a wholly-owned subsidiary of EXSIM Development Sdn Bhd. In a statement, it said the collaboration will allow Proven Land to benefit from a diverse and innovative project portfolio that promises significant growth and development opportunities. According to Proven Land, EXSIM is known for its cutting-edge, green, and sustainable projects, and has a prominent presence in the property development sector. “By subscribing to the stake, we are poised to leverage their innovative projects and expertise, enhancing our portfolio and creating new opportunities for growth. “This collaboration underscores our commitment to high-potential sectors and driving economic prosperity in the Asean region,” said Proven Land director Jack Leong. EXSIM managing director Lim Aik Hoe added that the collaboration signifies the confidence in EXSIM in building more greener and sustainable developments, while elevating the living lifestyle of its buyers. Looking ahead, Proven Land said it remains highly optimistic about the future growth of the property development landscape in Malaysia. Meanwhile, Proven Land said it has entered into an agreement with Octowill Trustees Bhd, which will support the firm’s future development.

KUALA LUMPUR: Sarawak Premier Tan Sri Abang Johari Abang Openg says the state’s takeover of a commercial bank will be sealed on July 19. The signing of papers to take over the bank, most likely the long-rumoured Affin Bank Bhd, would be on schedule, he added. While he did not specifically name the bank, Abang Johari said that Sarawak is set to take over a major financial block, positioning itself as a dominant player in Malaysia’s banking industry. “There is no more secrecy. By then, we will officially sign to take over this major block, which includes substantial shares, soon, July 19,” he was quoted by Borneo Post after announcing Amanah Saham Sarawak Bhd’s dividend today. Abang Johari noted that the acquisition symbolised Sarawak reclaiming its former assets. “We once lost what we had, and now we are taking it back. Previously, we had six banks taken from us, and now we are reclaiming them. Now we even have our own bank. “The bank we are acquiring is bigger than those six banks, and we aim to become a dominant player in Malaysia’s banking business,” he added. The Armed Forces Fund Board (LTAT) is currently the largest shareholder of Affin Bank, with about 28 per cent stake, followed by the Bank of East Asia Ltd, with over 23 per cent and LTAT’s wholly-owned Boustead Holdings Bhd with about 20 per cent. The Edge in a report in February said Bank Negara Malaysia was mulling the Sarawak government’s proposal to raise its holding in Affin Bank to around 30 per cent, from 4.8 per cent. On April 13, Affin Bank in a filing with Bursa Malaysia, said the LTAT had sold 112.56 million shares in the bank to the Sarawak financial secretary for RM221.74 million. The bank said it had sold the shares, representing 4.95 per cent of the total issued shares, at RM1.97 each.–Business Times