SDS GROUP BERHAD Acquiring Mamee’s Factories In Johor
Monday, August 18, 2025
Target Price: RM0.88
Return: +31.3%
Rating: Outperform
Main Sector: Consumer Products & Services
Bursa Code: 5212
Bloomberg Ticker: SDSHSB:MK
Shariah-Compliant: Yes
SHARE PRICE CHART
SHARE PRICE PERFORMANCE
| 1M | 3M | 12M | |
|---|---|---|---|
| Absolute Returns | -1.2 | -18.2 | -17.5 |
| Relative Returns | -11.2 | -17.5 | -15.6 |
KEY STOCK DATA
Market Capitalisation (RM m) 364.9
No. Of Shares (m) 544.6
MAJOR SHAREHOLDERS
| % | |
|---|---|
| Tan Kim Seng | 24.2 |
| Tan Kim Chai | 24.2 |
| Tan Yen Haw | 4.7 |
DESCRIPTION
SDS is predominantly involved in the manufacturing and distribution of bakery products, as well as the wholesale and retail channels.
KEY POINTS
- SDS Group Berhad (SDSB), an indirect wholly-owned subsidiary of SDS, had entered into agreements to acquire Mamee Bakery SB’s factories in Johor, as well as the entire production lines, registered trademarks and production know-how of London/Tora Swiss Roll for a total consideration of RM28m. We are positive of this acquisition as we believe that it will generate synergies by bolstering SDS’ product portfolio while enhancing operational capabilities under the same distribution network. Given SDS’ net cash of c.RM27m, funding should not be an issue. We are keeping our earnings estimates unchanged, pending further information from management. We reiterate our Outperform rating with an unchanged target price of RM0.88, based on a 12x CY26F EPS.
- Details. The purchase consideration consists of (1) RM26m for the acquisition of land in Mukim Plentong, Daerah Johor Bahru and (2) RM2m for the acquisition of entire production lines of machinery, equipment and tools associated with the factories, registered trademarks and production know-how. These assets are for the production and packaging of London/Tora Swiss Roll, layer cakes and bear cakes.
- Operations. SDS’ manufacturing operations are supported by the two manufacturing plants in Kempas, Johor and Seremban, Negeri Sembilan with an average utilisation of 70-80%. SDS targets the mass market under its wholesale brands, Top Baker and Daily’s, distributing its products across Peninsular Malaysia and Singapore on 24-hour logistics network. Top Baker products are usually sold in groceries and sundry shops while the products of Daily’s are sold in hypermarkets, supermarkets and convenience stores. Located within the Johor state, this acquisition is expected to complement SDS’ existing business by broadening its product offering under the same distribution network. It will also lead to greater cost optimization through sharing of resources and enhanced manufacturing capability given the proximity of Kempas and Plentong. This also aligns with the group’s strategy to grow export sales through products with longer shelf lives.
- Industry outlook. According to data from Statista, Malaysia’s bread and bakery products market is expected to reach USD2.5bn in 2025. Between the 2025 and 2030, it is projected to grow at a CAGR of 5.6%, mainly attributable to the burgeoning food consumption trends amongst consumers. The shift is driven by increasing health awareness and convenience. While rice remains a staple among Malaysians and there is a growing trend in bread consumption with consumers preferring bread as a substitute for carbohydrate due to factors like convenience and perceived health benefits.
KEY FINANCIAL SUMMARY
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 324.1 | 345.7 | 358.8 | 382.6 | 407.3 | 6.0% |
| Operating Profit | 44.2 | 45.3 | 47.4 | 55.4 | 61.7 | 10.8% |
| Pre-tax Profit | 43.3 | 44.3 | 46.3 | 54.2 | 60.5 | 10.9% |
| Net Profit | 32.9 | 33.7 | 35.2 | 41.2 | 46.0 | 10.9% |
| EPS (Sen) | 6.0 | 6.2 | 6.4 | 7.5 | 8.4 | 10.9% |
| P/S (x) | 11.1 | 10.9 | 10.4 | 8.9 | 8.0 | |
| DPS (Sen) | 1.7 | 1.5 | 1.6 | 1.9 | 2.1 | |
| Dividend Yield (%) | 2.5 | 2.2 | 2.4 | 2.8 | 3.1 |
Source: Company, PublicInvest Research estimates
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Revenue | 324.1 | 345.7 | 358.8 | 382.6 | 407.3 |
| Operating Profit | 44.2 | 45.3 | 47.4 | 55.4 | 61.7 |
| Other Gains / (Losses) | 0.0 | 0.0 | 0.0 | 1.0 | 2.0 |
| Finance Costs | -0.9 | -1.0 | -1.2 | -1.2 | -1.2 |
| Pre-tax Profit | 43.3 | 44.3 | 46.3 | 54.2 | 60.5 |
| Income Tax | -10.4 | -10.6 | -11.1 | -13.0 | -14.5 |
| Effective Tax Rate (%) | 24.0 | 24.0 | 24.0 | 24.0 | 24.0 |
| Minorities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Reported Net Profit | 32.9 | 33.7 | 35.2 | 41.2 | 46.0 |
| Core Net Profit | 32.5 | 32.3 | 35.2 | 41.2 | 46.0 |
Growth (%)
| 2024A | 2025A | 2026F | 2027F | 2028F | |
|---|---|---|---|---|---|
| Revenue | 14.2 | 6.7 | 3.8 | 6.6 | 6.5 |
| Gross Profit | 31.2 | 2.6 | 4.7 | 16.8 | 11.4 |
| Net Profit | 32.4 | 2.3 | 4.5 | 17.2 | 11.6 |
Source: Company, PublicInvest Research estimates
BALANCE SHEET DATA
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 120.7 | 133.3 | 161.3 | 181.3 | 201.3 |
| Goodwill and Intangibles | 15.4 | 17.5 | 17.5 | 17.5 | 17.5 |
| Receivables | 18.4 | 12.5 | 20.4 | 21.8 | 23.2 |
| Cash and Cash Equivalents | 30.0 | 48.0 | 60.6 | 81.7 | 110.4 |
| Other Assets | 9.0 | 17.2 | 16.3 | 16.8 | 17.3 |
| Total Assets | 193.4 | 228.5 | 276.2 | 319.1 | 369.8 |
| Payables | 23.9 | 26.5 | 26.4 | 27.7 | 29.1 |
| Borrowings | 19.6 | 21.3 | 23.6 | 24.2 | 24.7 |
| Other Liabilities | 21.3 | 24.6 | 44.5 | 54.8 | 69.0 |
| Total Liabilities | 64.9 | 72.4 | 94.6 | 106.7 | 122.9 |
| Shareholders’ Equity | 128.5 | 156.1 | 181.6 | 212.5 | 246.9 |
| Total Equity and Liabilities | 193.4 | 228.5 | 276.2 | 319.1 | 369.8 |
Source: Company, PublicInvest Research estimates
PER SHARE DATA & RATIOS
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Book Value Per Share (RM) | 0.2 | 0.3 | 0.3 | 0.4 | 0.5 |
| NTA Per Share (RM) | 0.2 | 0.3 | 0.3 | 0.4 | 0.4 |
| EPS (Sen) | 6.0 | 6.2 | 6.4 | 7.5 | 8.4 |
| DPS (Sen) | 1.7 | 1.5 | 1.6 | 1.9 | 2.1 |
| Payout Ratio (%) | 27.4% | 24.3% | 25.0% | 25.0% | 25.0% |
| ROA (%) | 17.0% | 14.7% | 12.7% | 12.9% | 12.4% |
| ROE (%) | 25.6% | 21.6% | 19.4% | 19.4% | 18.6% |
Source: Company, PublicInvest Research estimates
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