The following table sets out the financial highlights based on the combined and consolidated statements of comprehensive income for FYE 2020 to 2022 and FPE 2022 to 2023:
Major Customers
The Group’s revenue from customers varies from year to year depending on the units of products sold to its customers. The top 5 major customers for FYE 2022.
The top 5 customers contribute 46.9% of the company's revenue, with the leading customer accounting for 20.1%, approximately 1/5 of the total revenue. The management has mentioned their dependency on the top 2 clients, Alok Group and Sonali Group. However, the company aims to diversify its product portfolio by initiating bioplastic compounding activities and conducting R&D to develop new applications for calcium carbonate products, thereby reducing customer dependency. This strategy will enable the company to expand its target market and customer base, ultimately reducing reliance on specific customers.
Major Suppliers
The top five major suppliers for Financial Periods Under Review are as follows:
The total purchases from the top 5 suppliers account for 54.0%. Although the management mentioned that they are not dependent on any specific suppliers, the choice of the current supplier for PPC powder is attributed to its quality and consistent supply over the past 14 years. Additionally, other materials such as limestone rocks and chips, chemicals, and packaging materials can also be sourced from alternative suppliers.
According to research from Vital Factor Consulting, the performance of the calcium carbonate industry in Malaysia depends on various factors, including economic conditions as well as demand for calcium carbonate in Malaysia and India. India is a major export market accounting for the largest proportion of Malaysia’s calcium carbonate export volume in 2022. Zantat Group mainly serves customers in India and Malaysia. In 2023, the real GDP of Malaysia moderated to 3.7% amid a challenging external environment. This was mainly due to slower global trade, the global technology downcycle, geopolitical tensions and tighter monetary policies. As for the manufacturing industry, real GDP moderated to 0.7% in 2023 mainly attributed to the weaker electrical and electronics product (E&E) segment (Source: Bank Negara Malaysia (BNM)). In 2023, the manufacturing industry accounted for 23.4% of Malaysia’s real GDP, while the manufacture of non-metallic mineral products contributed 3.3% to the real GDP of the manufacturing industry (Source: DOSM). In 2023, the real GDP of non-metallic mineral products grew by 4.3%.
Demand for calcium carbonate in Malaysia and India.
The demand for calcium carbonate in Malaysia is represented by export and domestic consumption. Between 2020 and 2022, the export volume of calcium carbonate declined at an average annual rate of 4.8%, mainly attributed to lower export volume to India. In 2022, India accounted for the largest proportion of Malaysia’s calcium carbonate exports with 40.9% of the total export volume, followed by Indonesia (14.4%) and Bangladesh (9.0%). The remaining 35.7% include several other countries with each country representing less than 9.0% of the total export volume of calcium carbonate in Malaysia (Source: Vital Factor analysis). Between 2020 and 2022, the export value of calcium carbonate in Malaysia grew at a CAGR of 1.4%. As for domestic consumption, the volume declined by 3.4% in 2022. In 2023, the export value of calcium carbonate in Malaysia grew by 2.4% compared to a decline of 4.8% in 2022. In 2023, the export value of calcium carbonate in Malaysia grew by 2.4% compared to a decline of 4.8% in 2022.
India is one of the main importers of Malaysia’s calcium carbonate. Similarly, for Zantat Group, India is a major export market for its calcium carbonate products. As such, the demand for calcium carbonate in India has an impact on Malaysia as well as Zantat Group. In India, statistics are commonly reported based on the government’s fiscal year, which is the period between 1 April and 31 March. The real GDP of India grew by 7.2% in 2022/23 and is estimated to grow by 7.3% in 2023/24 (Source: Ministry of Statistics and Programme Implementation (MOSPI), India). In 2021/22, being the latest available information, the consumption volume of calcium carbonate in India grew by 12.1% following a decline of 23.1% in 2020/21, indicating a recovery from the COVID-19 pandemic. Nevertheless, it has not reached its pre-COVID-19 level in 2019/20. In 2021/22, domestically produced calcium carbonate represented 20.2% of India’s consumption of calcium carbonate in terms of volume. As such, India relies on the import of calcium carbonate from overseas to meet the demand for calcium carbonate. This augurs well for operators involved in the manufacture of calcium carbonate in Malaysia that exports to India. In 2022/23, the import of calcium carbonate from Malaysia represented 26.1% of the total import volume of calcium carbonate in India. (Source: Ministry of Commerce and Industry, India)
Market Size and Share
Source: Vital Factor Consulting
The business strategies and plans are summarised in the following diagram:
Opportunities
Risk
Click here to refer the IPO - Zantat Holdings Berhad (Part 1)
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