上市捷报丨沙利文助力双财庄有限公司成功赴港上市(2321.HK)

Swang Chai Chuan Limited (Stock Code: 2321.HK) successfully listed on the main board of the Hong Kong capital market on August 19, 2022. The company is one of the top five food and beverage distributors in Malaysia. Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') provided exclusive industry advisory services for the listing of Swang Chai Chuan Limited on the Hong Kong stock market, and hereby warmly congratulate the company on its successful listing.

Swang Chai Chuan Limited (Swang Chai Chuan Limited, hereinafter referred to as 'Swang Chai Chuan') successfully listed on August 19, 2022, with a global issue of 241,000,000 shares priced at HK$0.56 per share.

During the listing process in Hong Kong, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, sponsor, and other professional intermediary institutions in completing the writing of relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer communicate with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on industry-related issues from the Hong Kong Stock Exchange.

Malaysia Food and Beverage Distribution Industry Overview

Definition of Food and Beverage Distribution

Food and beverage distribution refers to the comprehensive service portfolio provided by food and beverage distributors to provide relevant companies with channels and expertise to develop their businesses, including traditional warehousing, logistics, transportation (with cold chain), and delivery services, as well as a series of customized value-added business development services throughout the entire industrial chain (such as market analysis and research, marketing and sales, and after-sales service). Food and beverage distributors support the transfer of food and beverages from upstream food and beverage suppliers through local channels and networks to downstream food and beverage customers.

Industrial Chain Analysis

The upstream of the food and beverage distribution industry includes third-party and other food and beverage product suppliers (including domestic and international brand owners and manufacturers), OEM suppliers of food and beverage products, and raw material suppliers. Importers and local agents may also play a role in connecting Malaysia's food and beverage suppliers with food and beverage distributors within the industrial chain. The downstream participants of the food and beverage distribution industry include retailers, catering businesses, and wholesalers through different channels. Food and beverage distributors in the middle stream provide food and beverage distribution services to upstream suppliers and downstream customers within the industrial chain.

In addition, many food and beverage distributors have developed their own product businesses, including branded and unbranded products, most of which are food and beverage products such as frozen foods, dairy products, and sauces and condiments. This has been re-packaged by many food and beverage distribution companies. Food and beverage distributors can purchase products from OEM suppliers and sell them under their own brands or choose a fully self-manufacturing model from raw material procurement to manufacturing and packaging. Due to economies of scale, the OEM model can significantly reduce production costs, which will improve the profitability of food and beverage distribution companies.

Industrial Chain of Malaysia's Food and Beverage Distribution Industry

Source: Frost & Sullivan Report

Market Size of Malaysia's Food and Beverage Industry

The market size of Malaysia's food and beverage industry increased from about RM49.4 billion in 2017 to about RM59.4 billion in 2021, with a compound annual growth rate of about 4.7%. Fresh food is the largest segment of the food and beverage industry, accounting for about 41.8% in 2021, followed by packaged food and raw material products (about 23.5%), beverages (about 10.6%), frozen foods (about 7.8%), sauces, oils, and condiments (about 7.1%), dairy products (about 6.3%), and other segments (about 2.8%).

Looking ahead, driven by continuous economic growth and purchasing power, the market size of the food and beverage market is expected to maintain stable growth, increasing from about RM62.7 billion in 2022 to about RM76.9 billion in 2026, with a compound annual growth rate of about 5.2%. Due to the COVID-19 lockdown, the public began hoarding food, which promoted consumption of food and beverage products (especially packaged food) during the pandemic. In addition, during the COVID-19 period, many people chose to stay at home, which stimulated interest in cooking and increased demand for dairy products (especially ice cream and cheese).

Market Size of Malaysia's Food and Beverage Industry

Estimated from 2017 to 2026

Source: Frost & Sullivan Report

Market Size of Malaysia's Food and Beverage Distribution Industry

The diverse population and cuisine of Malaysia continue to drive global demand for various types of food and beverages, which will further bring huge market opportunities to food and beverage distributors. From 2017 to 2021, the Malaysian food and beverage distribution market maintained stable growth, with its market size increasing from about RM19.1 billion to about RM24.2 billion, with a compound annual growth rate of about 6.1%. Looking ahead, with control over COVID-19, the market size of the Malaysian food and beverage distribution market is expected to gradually recover and reach about RM333 billion by 2026, with a compound annual growth rate of about 6.5% starting from 2022. With more people preferring to dine at home and reduce social activities after COVID-19, there is an increase in demand for food and beverage products (especially frozen foods).

In addition, more industry participants have strengthened their participation in high-value-added products, such as frozen foods and dairy products, which require cold chain facilities including refrigerated transportation and storage. Therefore, it is expected that frozen and dairy products will develop rapidly in the food and beverage distribution industry within the next few years.

Market Size of Malaysia's Food and Beverage Distribution Industry (by Revenue) (Malaysia),Estimated from 2017 to 2026

Source: Frost & Sullivan Report

Overview of the Food and Beverage Distribution Industry on the Peninsula of Malaysia

Driven by economic stimulus, population growth, and urbanization levels, the market size of the food and beverage distribution industry on the Peninsula of Malaysia (by revenue) increased from about RM15.8 billion in 2017 to about RM20.1 billion in 2021, with a compound annual growth rate of about 6.2%. The percentage of the total market size of the food and beverage distribution industry in Malaysia (by revenue) on the Peninsula of Malaysia increased from about 82.9% in 2017 to about 83.2% in 2021.

According to data released by the Malaysian Bureau of Statistics, the nominal GDP on the Peninsula of Malaysia grew at a compound annual rate of 4.2% from 2016 to 2020, higher than the overall Peninsula of Malaysia (3.8%) and other major regions of the Peninsula (Southern: 3.1%; Northern: 3.7%; Eastern: 2.8%). In addition, according to the Household Expenditure Survey report released by the Malaysian Bureau of Statistics, food and beverage expenditure on the Peninsula of Malaysia grew at a compound annual rate of about 5.5% from 2016 to 2019, higher than the overall Peninsula of Malaysia (4.8%), and also the highest among different regions (Southern: 5.4%; Northern: 3.5%; Eastern: 3.9).

Therefore, driven by the faster economic development on the Peninsula of Malaysia, the market size of food and beverage distribution in the western part of the Peninsula increased from about RM6.8 billion in 2017 to about RM8.8 billion in 2021, with a compound annual growth rate of about 6.5%, higher than that in the southern part (about 6.2%), northern part (about 5.7%), and eastern part (about 6.0%) of the Peninsula, and the proportion of food and beverage distribution on the Peninsula of Malaysia in the overall market also increased from about 43.0% in 2017 to about 43.6% in 2021.

In the foreseeable future, the market on the western part of the Peninsula will further develop, with strong economic growth momentum and continuously improving revenue levels, especially in Kuala Lumpur, the capital of Malaysia's culture, finance, and economy. The market size of food and beverage distribution on the western part of the Peninsula (by revenue) is expected to increase from about RM9.4 billion in 2022 to about RM12.4 billion in 2026, with a compound annual growth rate of about 7.0%, ranking among the top in various regions, followed by the northern part (about RM6 billion), southern part (about RM5.3 billion), and eastern part (about RM4.2 billion).

Market Size of Malaysia's Food and Beverage Distribution Industry (by Revenue)Estimated from 2017 to 2026

Source: Frost & Sullivan Report

Competitive Landscape Analysis

By revenue, the Malaysian market size reached RM242 billion in 2021. The competitive landscape of the Malaysian food and beverage distribution market is relatively fragmented, mixed with global and local participants, and highly competitive. The Malaysian food and beverage distribution market has more than 200 participants, and the top five participants account for 22.6% of the total revenue share. Swang Chai Chuan's revenue in 2021 was about RM5.929 billion, ranking fourth and accounting for about 2.5% of the total market size.

Top Five Companies in Malaysia's Food and Beverage Distribution Industry by Revenue, 2021

Source: Frost & Sullivan Report

Frost & Sullivan has rich research experience in the consumer goods industry and has assisted many well-known enterprises to successfully list on the capital market. Successful listing cases include: Meituan (9896.HK), Joyouwang Foods (1927.HK), Vesync (2148.HK), Mooncake (6993.HK), Popcorn (9992.HK), Meituan (NYSE:MNSO, 9896.HK), Nongfu Spring (9633.HK), Fengxiang Foods (9977.HK), Simore (6969.HK), China Feihai (6186.HK), Top Sports (6110.HK), China National Tobacco International (6055.HK), Youpin 360 (2360.HK), Wugu Flour Mill (1837.HK), Baby Tree (1761.HK), Yongsheng Agriculture (8609.HK), Longhui Holdings (1007.HK), Xinyong International (1587.HK), Yiyuan Liquor (8146.HK), Jierong International (2119.HK), Bingshi International (1705.HK), Golden Cat and Silver Cat (1815.HK), HuaMi Technology (NYSE:HMI), Nippon Foods (1475.HK), Debao Group (8436.HK), Barbie (8297.HK), Asian Grocery (8413.HK), Chow Haid (1458.HK), COFCO Meat (1610.HK), COFCO Dairy (1492.HK), Dali Foods (3799.HK), Manor Farm (1533.HK), Wanzhou International (0288.HK), Kettle (3709.HK), Urban Beauty (2298.HK), Cabins (2030.HK).

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