KUALA LUMPUR: Consumer packaged goods company Kim Teck Cheong Consolidated Bhd (KTC)'s expansion plans to build two new manufacturing facilities in Kuching, Sarawak and Balikpapan, Indonesia and add more warehouse space and trucks, sweetens the pot for Rakuten Trade, which has tagged a "Buy" call to the company's shares with a target price of RM0.33.
KTC is in the process of identifying land to build manufacturing facilities in Kuching and Balikpapan, Indonesia due to the perishable nature of bakery products, with a shelf life of up to seven days.
The company sees significant growth potential for its bakery products, especially in Indonesia, as the bakery product segments account for 2.6 per cent of KTC's total revenue in the third quarter of 2023.
"Each facility will have an approximate manufacturing floor space of 10,000 sq ft. The commencement of these facilities, targeted for July 2024, is expected to increase the number of loaf batches by 200 per cent to 97,344 batches by FY2025," it said.
Currently, KTC owns and rents 13 warehouses, totaling 350,000 sq ft, which are currently 85 per cent utilised. It also plans to add 140,000 sq ft of warehouse space within the next two years, and another 30 to 40 trucks to its fleet to make up 200 trucks, by the end of 2023.
KTC's listing was transferred from the ACE Market to the Main Market of the stock exchange today.
Rakuten has forecast a net profit of RM22.2 million and RM24.4 million for the financial year 2024 (FY24) and FY25 respectively for the company. KTC is expected to report a net profit of RM21.7 million for the financial year ending June 30 2023, on RM738 million revenue.
According to Rakuten's calculations KTC has shown impressive growth after attaining a 62 per cent compound annual growth rate (CAGR) from 2019 to 2022.
With more than 85 years of experience, KTC is now a leading CPG distributor in East Malaysia and Brunei.
It has established a strong distribution network covering brands such as Procter & Gamble, L'Oreal, Nestle, Danone, Kimberly-Clark and more, with 29k stock-keeping units under its portfolio.
Additionally, KTC manufactures and distributes its own bakery products under the brand Creamos.
KTC holds the exclusive distributorship of Gardenia bread in East Malaysia and Indonesia, a venture that started in 2020.
At the close of morning session trade, KTC's shares was down almost two per cent at RM0.255, with 890,300 shares traded.
