Highest Returns to Shareholders over three years
CONSUMER PRODUCTS & SERVICES
CI Holdings Bhd - A pivotal venture that continues to pay off, bolstered by commodity price surge
CI Holdings Bhd, whose major shareholder is former second finance minister Datuk Seri Johari Abdul Ghani, is principally involved in the manufacturing and packaging of edible oils. It is also in the trading and manufacturing of water taps and plumbing accessories.
But edible oils were not always its core business. The group was previously involved in the manufacturing of ready-to-drink beverages and held the exclusive franchise for brands like Pepsi, Mirinda, 7-Up and Lipton. It sold that business, under Permanis Sdn Bhd, to Japan-based Asahi Group Holdings Ltd for RM820 million in October 2011, and exited the food and beverage business.
Its venture into edible oil started in 2013, when it acquired Continental Resources Sdn Bhd, which is involved in the edible oil packaging and distribution business. Supported by the edible oil business, which exports about 95% of its output, the group returned to profitability in the financial year 2015 (FY2015) after two consecutive years of losses, and hasn’t looked back since.
In FY2019, the company made a net profit of RM19 million. This jumped to RM30.1 million in FY2020, and soared further to RM70 million in FY2021, as palm olein prices climbed more than 50%, with premium pricing brought on by high demand for immediate delivery at its market destinations, according to its 2021 annual report.
The stellar performance of its edible oil products division more than offset the RM330,000 loss after tax in its tapware and sanitary ware division, a non-essential sector that was not allowed to operate during the pandemic lockdowns, and later not at full capacity when allowed to do so.
The impressive net profit growth spurred a similar upward trend in its share price. While the stock price (adjusted) dipped to 91 sen on March 31, 2020, not long after the outbreak of Covid-19 in Malaysia — down 31 sen from RM1.22 a year earlier — it rebounded quickly and had soared to RM2.09 by March 31, 2021. A year later, it climbed to RM2.93.
The gains translate into an adjusted three-year compound annual growth rate of 34.1% over the three-year period — the highest adjusted total returns to shareholders among The Edge Malaysia Centurion Club member companies under the consumer products and services sector.
Going forward, the group will continue to focus on its expansion plans to grow revenue for its edible oil business, and smart partnerships with property developers in its tap and sanitary ware business.
“The edible oil products division is focusing on expanding its customer base. We believe that it is sustainable to approach new and reliable customers in various markets who currently buy from our competitors. We will also focus on our own product range, especially our own palm olein house brands and non-oil products such as soap-related products, evaporated and condensed milk and milk powder to improve future earnings and margin,” says the group, adding it that is also looking into expanding its capacity of manufacturing jerry cans.
Meanwhile, the company says its tap and sanitary ware division has managed to secure several hospital projects to ensure a more sustainable and long-term business model, with more still under negotiation.
“The division will continue to focus on the specification and extension of its range of products in the healthcare market. The division also aspires to be the ‘station master’ for tap and sanitary ware at all MRT and LRT stations nationwide, after securing the supply tender to all 32 MRT2 stations from Sg Buloh to Serdang to Putrajaya. Moving forward, it is looking to secure more of such projects,” it adds.
The group recently closed its FY2022 with a net profit of RM66.49 million, a slight drop from FY2021’s RM70 million, despite revenue jumping to RM4.05 billion from RM3.14 billion, amid lower margins, higher realised and unrealised foreign exchange losses and higher trade receivable impairments, based on its unaudited results filed with Bursa Malaysia.
Johari, who is also CI Holdings’ non-independent, non-executive chairman, holds a 32.96% stake in the company via JAG Capital Holdings Sdn Bhd.