OTS Holdings (SGX:OTS) made its debut on the SGX Catalist today. Founded in 1993, OTS Holdings has established itself as a brand builder and food manufacturing group in the consumer industry with a strong niche in ready-to-eat and ready-to-cook meat products. OTS Holdings operates the flagship brands of “Golden Bridge” and “Kelly’s”.
With close to 74% of revenue in Singapore, OTS Holdings' key drivers include the increasing awareness of food security in Singapore, and the increasing demand of plant-based products as sustainable protein alternatives and the rising global demand for halal products.
OTS Holdings does not have a fixed dividend policy, however, its Directors intend to recommend dividends of not less than 50% of their net profit attributable to owners for FY2021 and not less than 40% for FY2022.
Founded in 1993, OTS Holdings has established itself as a brand builder and food manufacturing group in the consumer industry with a strong niche in ready-to-eat and ready-to-cook meat products with key markets in Singapore and Malaysia. The Group’s vision is to develop a growing portfolio of established consumer brands and to become an innovative market leader in the region.
Priding themselves as “Brand Builders”, OTS Holdings places strong emphasis on the branding and positioning of the Group’s flagship brands, “Golden Bridge” and “Kelly’s”, which have become established household names within the ready-to-eat and ready-to-cook meat products market in Singapore and Malaysia.
Following is the highlights of the IPO based on OTS Holdings' Offer Document.
1. OTS Holdings' Business Segments
OTS Holdings derives its revenue from 4 business segments:
- Modern trade – sales derived from major supermarkets.
- General trade – sales derived from convenience stores, provision shops and wholesalers.
- Food services – sales derived from hotels, restaurants, hawker centres, food courts, food and beverage stores, and caterers.
- Others – sales derived from e-commerce platforms and the export markets, and other income such as vehicle rental income and miscellaneous income.
2. OTS Holdings' Geographic Reach
OTS Holdings’ geographic revenue breakdown in FY2020:
- Singapore (73.8%) - Key drivers include increasing awareness of food security in Singapore, and the increasing demand of plant-based products as sustainable protein alternatives.
- Malaysia (21.5%) - Malaysia has a large meat processing industry with a total market size of S$371 million as of 2018. Between 2018 and 2023. Its market value for frozen processed meat, chilled processed meat and shelf-stable meat is forecasted to grow at a CAGR of 3.6%, 3.0% and 2.4% respectively.
- Others (4.7%) - The Group’s food products have been marketed and sold in more than 25 countries, including Brunei, Hong Kong, Myanmar, India and the European Union.
3. OTS Holdings' Company Prospects
(See page 186 of OTS Holdings' Offer Document for complete list of prospects, business strategies & future plans)
Increasing awareness of food security in Singapore due to dependence on food imports
- Besides diversification of food sources and optimisation of local production, national stockpiling is the third core strategy in Singapore’s Food Security Roadmap as stockpiling can help to stabilise prices in times of short-term shortages.
- Increased awareness and importance placed on shelf-stable products is expected to benefit the demand for the Group’s products.
Increasing demand of plant-based products as sustainable protein alternatives
- The global plant-based meat market size by revenue is estimated to cross US$12 billion by 2025, growing at a CAGR of more than 18% during the period from 2019 to 2025.
- Demand is driven by growing public awareness and social consciousness of the sustainability of animal-based protein consumption and COVID-19 accelerating the shift to meatless alternatives.
- OTS Holdings is looking to capture this rising trend through research and development of their own shelf-stable, plant-based food products.
Rising global demand for halal products
- The number of Muslims in the world is projected to increase significantly, driving the demand for halal food. Between 2015 and 2060, the Muslim population is projected to increase by 70%, which is at a faster pace than any other religious group, and will reach around 3.0 billion, constituting around 31% of the world population, in 2060.
- OTS Holdings established a retail brand, “El-Dina”, and a food service brand, “Kizmiq” under its subsidiary, Ellaziq Private Limited, a halal food specialist in Singapore.
- The Group believes that with its halal certification from the Majlis Ugama Islam Singapura (MUIS), coupled with the existing large Muslim populations in Malaysia and Indonesia, it is well positioned to scale and capture the potential global halal market.
New venture in Philippines by early 2022
- Retail sales in Philippines’ packaged food market had been estimated to reach nearly US$12.3 billion in 2019, and is estimated to grow by 30.8% to reach US$17.2 billion in 2024.
- Growth drivers include the expansion of modern food retail markets such as supermarkets and convenience stores in both urban and rural areas, as consumers demand convenience and flexibility.
4. OTS Holdings' Competitive Strengths
(See page 180 of OTS Holdings' Offer Document for complete list of competitive strengths)
Established heritage with strong market brand recognition– Track record of over 27 years in the industry with four product categories – chilled, frozen, dried and shelf-stable meat products – within one single facility. “Golden Bridge” and “Kelly’s” brands, established since 1993 and 2004 respectively, are well-known and have a long-standing presence in the Singapore and Malaysia consumer markets
Strong track record of product innovation and successful introduction of new brands and products - During the period under review in the Offer Document, the Group’s dedicated in-house R&D team developed and launched more than 160 new products and/or new varieties of food products
Technology driven manufacturing capabilities in the Group’s modern production facilities - Meat products with different storage requirements; Halal manufacturing capabilities
Adherence to stringent quality assurance and food safety standards in Singapore production facilities - Both of OTS Holdings’ production facilities in Singapore have achieved a Grade ‘A’ status for excellence in food hygiene and food safety standards from the Singapore Food Agency for certain types of processing
Established sales and distribution network in Singapore and Malaysia allows OTS Holdings to tap on the highly scalable export business - Through the Group’s export business and wholesalers, their food products have also been marketed and sold in more than 25 countries, including Brunei, Hong Kong, Myanmar, India and countries in the European Union
5. OTS Holdings' Key Risks
(Page 46 of the OTS Holdings' Offer Document shows a complete list of risk factors.)
- Business susceptibility to outbreaks of diseases in livestock or food scares and/or other types of disasters.
- Ability to obtain or renew the licences and permits required to carry on business and operations, including revocation of halal certifications issued in respect of halal products or non-recognition of halal certifications in other jurisdictions.
- Susceptible to contamination of food products and product labelling errors and the attendant risks arising therefrom.
- Susceptible to shortage of food ingredients and packaging materials and increase in costs.
- Susceptible to delays in delivery of food products, food ingredients and packaging materials, and deterioration in quality of food products and food ingredients during delivery.
- The Group relies on external suppliers for our packaging materials and may be adversely affected by any safety issues relating to these packaging materials.
OTS Holdings – Financials & Valuation
- Based on its audited combined financial statements, total revenue grew by a CAGR of 20.2% from S$23.88 million in FY2018 to S$34.54 million in FY2020, while profit after tax grew by a CAGR of 57.9% from S$1.42 million to S$3.55 million over the corresponding period. In HY2021, total revenue was S$21.12 million and profit after tax was S$2.88 million, representing an increase of 44.2% and 261.7% respectively over HY2020.
- According to the Offer Document, OTS Holdings’ post-invitation earnings per share (EPS) is S$0.0166 based on the audited FY2020 income statement. Based on this and the Invitation Price of S$0.23, the price-to-earnings (P/E) ratio is 13.8x for FY2020.
- Although OTS Holdings currently does not have a fixed dividend policy, the Directors intend to recommend and distribute dividends of not less than 50% of their net profit attributable to owners for FY2021 (excluding the interim dividends of S$1.0 million declared in respect of FY2021) and not less than 40% of their net profit attributable to owners for FY2022.
OTS Holdings' IPO details
- Invitation price at S$0.23 per Invitation Share.
- Total number of Shares offered at 41.0 million shares
- 40.0 million Placement Shares.
- 1.0 million Public Offer Shares.
- Estimated IPO Market Capitalisation at S$49.2 million.
- Use of net proceeds from the offer (total of S$6.6 million):
- S$2 million – Improvement and/or expansion of production efficiency and capacities, including the acquisition of new machineries and equipment.
- S$2.5 million – Expansion of the Group’s overseas operations, including the initial investment and set up costs in Philippines.
- S$0.5 million – Developing new products and engaging in research and development.
- S$1.562 million – General working capital purposes.
See OTS Holdings' Offer Document here.
📢 OTS Holdings (SGX:OTS)'s IPO balloting results: ➠ 1mil Public Offer Shares: ~233.6 times subscribed. ➠ 40mil Placement Shares: ~2.8 times subscribed. ➠ Total invitation of 41mil Shares is ~8.4 times subscribed..Posted by SGinvestors.io on Wednesday, June 16, 2021
🆕 OTS Holdings (SGX:OTS)'s debut on SGX Catalist (17-Jun): ➠ Total no. of IPO shares: 41mil. IPO price: S$0.23 per share. ➠ Total no. of outstanding shares: 214mil. ➠ Day 1 Open: S$0.30; Day High: S$0.31; Day Low: S$0.29; Day 1 Last Done: S$0.29. ➠ ~25.7mil shares changed hands at average price of S$0.2965. ➠ ~1.2mil shares short sold at average price of ~S$0.306. #OTS #SGXIPOPosted by SGinvestors.io on Thursday, June 17, 2021