Financial Highlights

The key financial highlights based on the historical audited combined financial statements of the Group for the Financial Years Under Review are as follows:

• The revenue grew from RM 94 million in FYE 2020 to RM 159 million in FYE 2023. The revenue from FYE 2021 to FYE 2023 fluctuated between RM 156 million and RM 159 million. The slowdown in revenue growth is mainly due to lower export orders from countries such as Turkey and Thailand.
• The gross profit margin grew from 9.80% in FYE 2020 to 13.22% in FYE 2023. The continuous growth of the gross profit margin is mainly due to the processing and trading of frozen seafood products, as well as an increase in the overall selling prices of frozen seafood. (Generally, a GP margin of 20% is considered high/ good).
• The PAT margin grew from 2.64% in FYE 2020 to 4.36% in FYE 2023.
• The gearing ratio is 0.04, which is below the benchmark range. This indicates that the company still has room to increase its debt to improve efficiency by using leverage. (A good gearing ratio should be between 0.25 – 0.5).

Major customers and suppliers

Major Customers

The table below lists our top five (5) major customers for FYE2023:

The top 5 major customers contributed 34.78% of the revenue. The company mentioned they are not dependent on any major customer as the revenue contributed from the top 5 major customers generally varies from year to year as they have a diverse customer base of over 300 customers during FYE 2020 to FYE 2023.

Major Suppliers

The table below lists our top five (5) major suppliers for FYE 2023:

The top 5 suppliers account for 30.03% of the purchases. The management has also mentioned that the group is not dependent on any major suppliers, as they are able to source similar seafood from their pool of suppliers. Additionally, there will not be any switching costs involved if they were to purchase seafood supplies from different suppliers, as they do not have any long-term or exclusive contracts with any of their suppliers.

Industry Overview

According to Providence Strategic's research, the frozen seafood processing industry in Malaysia, as indicated by the overall industry revenue of seafood processing companies in Malaysia, has been growing at a CAGR of 9.7% between 2015 and 2023. Moving forward, PROVIDENCE estimates that the seafood processing industry in Malaysia will grow at a CAGR of 9.4% between 2024 and 2026.

The industry is expected to be driven by growing exports to international markets in light of rising global demand, particularly in Asia Pacific, which has the highest per capita consumption of seafood globally. Between 2017 and 2023, retail sales volume and retail sales value of frozen seafood in Asia Pacific grew at CAGRs of 3.5% and 6.7%, respectively. The frozen seafood processing industry in Malaysia is also expected to be driven by local demand for seafood as Malaysia is among the world’s top 10 seafood

consumers.

As an industry player in the frozen seafood processing industry in Malaysia, OFB Group stands to benefit from the positive outlook of the frozen seafood processing industry and frozen seafood market. The Group’s plan to grow its exports into China will be driven by the growing market for frozen seafood products in China. China is a major market in Asia Pacific for frozen seafood products, constituting 74.7% and 55.8% of retail sales volume and retail sales value of frozen seafood products in Asia Pacific in 2023.

Further, OFB Group is expected to benefit from the growing dried seafood market in light of its future plan to expand into the processing and trading of dried seafood products. Globally, the dried seafood market size has been growing at a CAGR of 3.6% between 2017 and 2023.

Source: Providence Strategic

Future plans and strategies for OCEAN FRESH BERHAD

The future plans and strategies of the Group are as follows:-

1. The company intends to expand its storage space by setting up a new cold storage facility.
2. The company intends to continue growing its exports of frozen seafood products to international markets, particularly China.
3. The company intends to venture into the processing and trading of dried seafood products.

MQ Trader View

Opportunities

1. The company has a wide network of customers from across the globe. Throughout its years of operation, the company has cultivated business relationships with a diverse network of both local and international customers. Currently, the international customers are from various countries, including Turkey, China, Thailand, Vietnam, Japan, Indonesia, the Philippines, Singapore, Korea, Italy, Portugal, the US, Australia, and Denmark. For the Financial Years Under Review, the company’s extensive network of customers comprises over 160 local customers and over 190 overseas customers.
2. The company is able to maintain a consistent supply of frozen seafood products throughout the year. Here are two reasons why the company can maintain a consistent supply even when wild-caught seafood may not be sufficient to meet market demand due to weather conditions and fish population:
   1. The company has a network of suppliers comprising local and international wholesalers, local and international processing facilities, as well as local fishing enterprises.
   2. The company has cold rooms that allow them to store frozen seafood supplies and products while maintaining their freshness and quality.

Risk

1. The company is exposed to foreign exchange rate fluctuations. Some of the overseas revenue and/or purchases are denominated in USD and RMB. As such, the company is exposed to foreign currency exchange risk arising from fluctuations in the exchange rates of USD and RMB against RM. In FYE 2023, 77.91% of revenue was from USD, 4.88% of revenue was from RMB, and 50.94% of costs were in USD.

Click here to refer the IPO - Ocean Fresh Bhd (Part 1)​

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