KUALA LUMPUR: SBH Marine Holdings Bhd, newly listed on the ACE market of Bursa Malaysia, said that while the Red Sea crisis has affected the company, the impact is not substantial.
The company's executive director Saw Leng Hean said that changes in shipping routes have affected shipments to European countries and the Middle East.
However, he said that with increased shipping rates, the company can pass on these costs to clients.
"Considering the extensive import-export activities of European nations, they contribute significantly not just to us but to the global market. Nevertheless, this is not a concern for us, as our sales are also diversified across Asian countries," he said.
Saw said, moving forward, the company will continue to focus on the premium market segment of the frozen food industry to ensure its long-term sustainability.
He said that this strategy would enable the company to achieve higher margins as it avoids direct competition with neighbouring countries.
"As we all know, our surrounding neighbours, Vietnam, Indonesia, Thailand, and India are actually targeting the commodity market, which is actually a low-priced item. We are targeting the premium-priced segment," he told reporters after the company's listing yesterday.
However, Saw pointed out that Malaysia isn't quite prepared for the premium market yet, citing an inconsistency in knowledge among local domestic consumers.
According to him, many still opt for more economical options and believe that buying seafood directly from the fish market is considerably cheaper.
"There is a need for education, but it will take time to educate people that frozen seafood is a better choice," he said.
Having said that he is optimistic about the frozen food sector because it is unaffected by inflation.
"The advantage of the food industry is its immunity to inflation. Even during challenging times, people may reduce seafood consumption, but they rarely cease entirely. Therefore, within the food industry, there is always potential for growth," he said.
Saw also noted that, amidst the Covid-19 pandemic a few years ago, the frozen food company saw an increase in sales.
"This indicates a shift towards healthier protein choices, particularly in marine protein, as people prioritise their health and well-being. Looking ahead, we remain highly optimistic about the industry's prospects, even amidst inflationary pressures," he said.
SBH made its debut on the ACE market of Bursa Malaysia at an almost 16 per cent premium of 25.5 sen per share, over its initial public offering (IPO) price of 22 sen per share.
The company raised a total of RM39.6 million through the public issue of 180.0 million new ordinary shares priced at 22 sen per share.
It plans to use over 70 per cent of the gross amount for business expansion, with 40.4 per cent or RM16 million, earmarked for the development of the Selinsing shrimp farm. Another 16.4 per cent, or RM6.5 million, will be for the construction of its second seafood processing plant, and another 15.4 per cent or RM6.1 million, will be for the purchase of machinery or equipment and motor vehicles.