Supreme Consolidated Resources Berhad (SUPREME, 0330) is set to debut on the Bursa Ace Market on 29 Nov 2024. SUPREME is mainly involved in the distribution of third-party as well as own brands for frozen and chilled food products and ambient F&B products in Sarawak and Sabah. We expect SUPREME to post core net earnings of RM11.1m and RM12.5m for FY25F and FY26F respectively driven by (i) wide product range, (ii) new warehouse, and (iii) positive industry growth in Sarawak. BUY with a fair value of RM0.30, premised on a weighted average 11.5x PER (in-line with sector average) on FY25F EPS.

With 40 years of expertise, SUPREME is a leading fast moving consumer goods (FMCG) distributor in Sarawak, representing 79 foreign and local third-party brands alongside three proprietary brands. Its diversified portfolio includes frozen and chilled food, ambient F&B, and non-F&B products, with a dominant presence across Sarawak, Sabah, and Myanmar. Key brands under its distribution include Ramly, Lady’s Choice, Anchor and more, showcasing SUPREME’s strong market presence and diverse offerings. Meanwhile, SUPREME is producing more own-brand products, ensuring better ASP and margins.

Fuelling its ambitious growth plans, SUPREME is utilising bulk of the IPO proceeds to expand its warehouse facility. This expansion will add 1,500 pallet spaces, increasing Kuching’s total storage capacity to 4,088 pallets, enabling Supreme to meet the growing market demand.

In addition to the warehouse expansion, the Group has allocated funds for working capital, primarily for payments to suppliers to secure inventories of frozen and chilled food products. SUPREME’s market coverage is supported by a wide distribution network of agents, stockists, and distributors. Its distribution centres in Kuching and Miri are managed via an extensive transportation network and has formed strategic partnerships in Sibu and Bintulu to provide additional channels, extending the Group’s reach to underserved areas.

SUPREME plans to allocate up to 50% as dividend payment going forward. As such, for FY24-FY26, we estimate dividend payouts ranging from 1.23sen to 1.45sen, yielding 4.9% to 5.8%. The company’s balance sheet shows a net gearing of approximately 0.2x as of 30 September 2023.

Source: Rakuten Research - 22 Nov 2024

To sign up for an account: http://bit.ly/40BNqKI

[Youtube Tutorial] Account Opening & Enable Foreign Equity: http://bit.ly/3I5Jzxo