KUALA LUMPUR: Sik Cheong Bhd jumped as much as 87 per cent, from its initial public offering (IPO) price of 27 sen, on its debut on the ACE Market of Bursa Malaysia.
The share price opened 85 per cent or 23 per cent premium to its IPO price.
At 10am, the stock was trading at 42 sen, giving it a market capitalisation of RM111.7 million.
Its trading volume rose to 60.71 million, making it the most active stock.
The company's IPO saw it raise RM17.8 million to expand its packaging facility and grow its fleet of delivery trucks.
Sik Cheong, which has built a strong reputation in the industry for more than 30 years, focuses on repackaging and distributing refined bleached and deodorised (RBD) palm olein oil, a staple cooking ingredient in Malaysia.
Its house brands include Sawit Emas & Vitamas.
The company's customer base exceeds 500 annually, including notable clients like The Chicken Rice Shop Restaurant Sdn Bhd and the NSK group.
Sik Cheong managing director Wong Hing Ngiap said Sik Cheong will expand its product range to include high oleic soybean oil, offering a cost-effective option suitable for most types of cooking methods.
This is to capitalise on the potential growth in Malaysian RBD palm olein repackaging industry which the compound annual growth rate (CAGR) is projected to be at 20.9 per cent, reaching RM12.8 billion in 2026.
"This growth is fuelled by continuous consumer demand, as well as growth in demand from hotel, restaurant and catering operators. "While palm olein oil is the most produced vegetable oil in the country, soybean oil holds the third position, indicating substantial market potential," he said in a statement.
The strategic expansion shall be facilitated by setting up a new packaging facility by rebuilding Factory No. 9 that is located next to Sik Cheong's existing facility, Factory No. 11.
With RM7.2 million of the IPO proceeds allocated to rebuild the factory, the company said it will increase the total operational space by 88.1 per cent, effectively addressing Factory No. 11's space limitations for repackaging and storing RBD palm olein oil products.
Additionally, the group intends to purchase new machinery and equipment for the repackaging of high oleic soybean oil and RBD palm olein oil products.
To drive sales growth, Sik Cheong plans to expand its geographical reach into other states such as Perak, Negeri Sembilan, Melaka and Pahang.
The company also allocated RM900,000 to increase its fleet of delivery trucks to ensure timely and reliable deliveries that is critical for maintaining customer confidence as edible oil is an essential ingredient for food preparation.
Meanwhile, the remaining RM6 million will be used for working capital to support ongoing operations, while RM3.8 million will cover the costs associated with the IPO process.