$KTC / 0180 (KIM TECK CHEONG CONSOLIDATED BERHAD) AGM
bakery comments. Changes: beginning of taking over , the sales is around 500k , now around 2M . They acknowledge the difference with west Malaysia in terms of automation and recipe. As they have a higher base cost, much different customer ground . They will need to fine tune the operation. The vast area has made the distribution of bakery products difficult , especially for area like sandakan and tawau.
As for flavour , they decided not for aggressive expansion of bread because they are still in much smaller scale compared with west Malaysia (population) , would be difficult to control and co-ordinate .
They acknowledge many sabahan bought in large amounts and some vendors buy in bulk to sell locally. While as for locals buying the gardenia in the airport , mainly for souvenir purposes. As for the sales channel , most of them are still with ktc but for those who bought in bulk from west Malaysia , such purchase is rather volatile and sometimes impulsive.
In contrast with the west Malaysian market (which gardenia bread is the most commonly purchased item in the petrol station) , upon taking over , they noticed the petrol station has the higher return rate compared with other channels, hence the wastage. Somehow in Sabah , petrol stations are not a good sales channel compared with west Malaysia . Only those small breads which are inferior in quality are selling there.
New bakery plant : highly emphasized on kuching , getting approval from Sarawak and Indonesia government . (I lost some of the parts, such as capacity and target customers as disturbed ) internal funds are expected to fund the investment. total capex would be at around 4-5M . long term will expand bakery plant in bintulu.
Logistics : handling shipping , something like haulage.
Distribution : buy from supplier , sell to retail shop end
May be integrated or standalone , depends on product and situation.
Distribution : they have secured few new suppliers and hence more purchasing which is eventually reflected into receivables.
He conservatively projected the CPG will grow by around 20% yoy with the expansion , which is still quite conservative . New suppliers include ablefarm , maxis , boh tea and meira (couldn't catch the word , Indonesia manufactures )
But such increases in sales might have lower profit margin (due to initial fine tuning progress , product blend )
As for the boycott due to middle east war , they just visited the segments in Brunei , which is the most Islamic in Borneo , sales are not affected at the moment . He believes the peak of the sentiments is over.
Truck : they are currently having a fleet size of 150 , yet to receive another 50 from the supplier.
Expansion of new warehouses which would cost 40M , they are not considering any cash call at the moment.
recent QR , regarding negative cash flow and more inventories : projected higher client to cater.
Penetration of the west Malaysia market . They have an office to distribute Sabah products in West Malaysia . But this is a very small scale and it's under trial . He asked for support of megasardine which is distributed by KTCniaga .
KTC technologies : they got the distributor rights of maxis , so will provide many lineage of maxis service . Like prepaid , post paid . ( i think more or less like digi store in the shopping mall )
my personal verdicts and opinion.
1. Datuk dexter has answered most of the questions himself and there was no filter on the question, which is commendable.
2. he is quite well aware on the challenges ahead , especially the bakery part.
3. potential opportunities
- economic development that would expand addressable markets.
4. risk : changes in consumer purchasing habit and channel . (shifted the doing routine purchase , from retail markets to direct manufacturer , either offline or online. )
5. i doubt they would be distributing dividend in 2024-2025 due to the expansion plan .
@terence775 @GrowthCapitalist @realalvinang