SBH Marine to ride on strong overseas demand for frozen seafood

ACE Market-bound SBH Marine Holdings Bhd is upbeat about its growth prospects, premised on strong demand for its frozen goods from overseas clients this year.

The company’s executive director, Saw Leng Hean, says SBH Marine’s growth will move in tandem with market growth in 2024, which is forecast at 5.5% for the year.

Additionally, the market for exported frozen seafood is expected to grow at a compound annual growth rate of 5.2% between 2023 and 2027, reaching a value of Rm2.86bil by 2027.

Saw tells Starbizweek that the industry’s positive trend is due to the growing global population, the decline in harvested fisheries, rising consumer health consciousness, and growing consumer affluence.

“Malaysia is considered a relatively small player in the global frozen seafood market, and it is estimated that Malaysia exported about 190,000 tonnes of frozen seafood in 2023, from 184,680 tonnes in 2022,” he says.

In light of this, Saw says SBH Marine’s focus is to export all its frozen-seafood goods overseas across three main regions – Europe, the Middle East and Asia.

SBH Marine has a total of 50 active clients spread across the three regions as of its financial year ended Dec 31, 2023 (FY23), with 80% of those clients being recurring.

Despite challenges for global trade due to global economic uncertainty and the impact of geopolitical tensions on, Saw says the group will continue to work closely with its overseas clients to better plan production and shipping schedules to avoid any potential logistics disruptions.

“We will also actively diversify our customer base by exploring new markets to cushion any adverse impact arising from geopolitical tensions around the world,” he adds.

Saw says the group is looking to explore new markets in China and expand its market share together with its Chinese partners.

In addition, he says, SBH Marine is looking towards business expansion, which involves developing its Selinsing aquaculture farm in Perak and constructing a new processing plant, as well as opening its new shrimp hatchery centre.

Of the Rm39.6mil that the group aims to raise through its initial public offering, 72.22%, or Rm28.6mil, will be utilised to fund the group’s corporate expansion.

Saw says the completion of the Selinsing farm’s development will reduce SBH Marine’s reliance on external suppliers, while allowing the group to increase its exports in the future.

He adds that the contributions from the group’s second Kuala Kurau processing plant in Perak, which is scheduled to start operations in the second quarter of 2026, will only be visible to the group in 2027.

In FY23, SBH Marine saw an improvement in its gross margins to 16.11% from 13.57% in FY22.

“This is due to lower procurement costs and successful negotiations for better pricing for squid, cuttlefish and octopus from our supplier.

“Following the consolidation of the financial results of SBH Perak Agro, our in-house shrimp farming operator, we anticipate further improvement in our overall gross margins,” Saw says.

He adds that SBH Marine also expects a gradual increase in its margins as in-house supply of shrimp increases and purchases of shrimp from third-party suppliers drops.

As at Feb 19, 2024, SBH Marine had purchase orders amounting to Rm45.4mil expected to be fulfilled and billed in FY24, Saw reveals.

“We will also actively diversify our customer base by exploring new markets to cushion any adverse impact arising from geopolitical tensions around the world.” Saw Leng Hean