Envictus International

Taken from 2nd Quarter FY2016 report on SGX.

Listed on SGX Catalist in 2004, and upgraded to the Mainboard in 2009, Envictus International Holdings Limited, is an established Food & Beverage (“F&B”) Group. The Group has an established portfolio of businesses and brands operating under its four business divisions – Trading and Frozen Food, Food Services, Nutrition and Food Processing. 

For the Trading and Frozen Food Division, the Group’s wholly-owned subsidiary, Pok Brothers Sdn Bhd, is one of Malaysia’s leading frozen food and premium food wholesaler and is a supplier to several major American restaurant chains in Malaysia. In addition, the division also distributes the Gourmessa quality cold cuts across supermarkets and hypermart chains in Malaysia.

Under the Group’s Food Services Division, Envictus holds exclusive rights for a 10- year period since July 2012 to develop and operate the fast growing American-styled Texas Chicken fast food restaurant chains in Malaysia and Brunei. Since its first flagship outlet opened in January 2013 at Aeon Bukit Tinggi Shopping Centre, Klang, Malaysia, the robust demand for the Texas Chicken restaurant concept has driven the Group to expand its store footprint at a healthy pace. Since March 28, 2016, Envictus also has a strategic investment in the specialty coffee chain business – San Francisco Coffee – which serves house roasted coffee in Malaysia.  

For Nutrition, under Naturalac Nutrition Limited (“NNL”), the Group markets its range of branded sports nutrition and weight management food products for mass consumer markets. This includes the Horleys™ brand name and other proprietary brands such as Sculpt™ (a weight management product tailored for women), Replace™ (an isotonic sports drink in both powder and carbonated format) and Pro-Fit™ (a high protein ready-to-drink beverage). In New Zealand, NNL’s products are primarily distributed through the route channels (gyms, health food shops, specialty stores and specialty nutrition shops) and retail channels (supermarkets, oil and convenience retail outlets) whilst its Australian sales are made predominantly through the route.

The Group’s Food Processing Division comprises of the business segments – Bakery, Butchery, Beverages as well as Contract Packing for Dairy and Juice based Drinks. Envictus’ Bakery business includes its wholly-owned subsidiary, Family Group which produces fresh breads and buns under the Daily Fresh and Family brand while Deluxe Food Services Sdn Bhd, another wholly-owned subsidiary, produces frozen bakery items. The Group’s Butchery business manufactures and processes cold cuts, sausages, portion control meat and smoked salmon for distribution to supermarkets, hotels and restaurants. For the Beverages business, the Group’s canned beverages are produced by Polygold Beverages Sdn Bhd in Seremban, Negeri Sembilan. The business’ stable of products include the Polygold brand of carbonated and noncarbonated drinks, Air Champ energy drink and Power Champ isotonic sports drink. Envictus successfully produced the 325ml PET bottle carbonated drink in June 2014 specially designed to suit the China market and has introduced it to the market. The Group also entered into the ready-to-drink segment via a joint venture in Envictus Dairies NZ Limited to establish New Zealand’s first state-of-art, UHT Aseptic PET bottling line for dairy, juice and water products at the Whakatu Industrial Park. 

Envictus International operates namely in 4 segments of businesses.

1) Trading & Frozen Food

2) Food Services

3) Nutrition 

4) Food Processing

The revenues for respective business segments are shown in the chart below.

  

Investment Merits:

1) Established management team: The Chairman & CEO of Envictus has been with the group since listing in 2004. Currently, both of them owns 30.75% stake in the company.

"Dato’ Jaya J B Tan is the Non-Executive Chairman of the Company and was

appointed to the Board since 23 December 2003. He graduated from the University

of Arizona and is a Mechanical Engineer by training. He has extensive experience

in forestry, property development, food retail operations, trading and financial

services. Previously, he has served as Chairman of several companies quoted on

the stock exchanges of Malaysia, United Kingdom, Singapore, Australia and India.

Dato’ Kamal Y P Tan is the Group Chief Executive Officer of the Company and was

appointed to the Board on 23 December 2003. He was appointed as the Executive

Director of the Company upon its listing on 23 December 2004 and has been redesignated

to the current position since 20 January 2009." 

(source: Annual Report 2015 )

2) Tee Yih Jia(TYJ) Food Manufacturing as the 2nd largest shareholder.

Goi Seng Hui of TYJ has an extensive network to markets outside Malaysia. The entrance of TYJ may see Envictus, growing its business outside Malaysia.

3) Proven Businesses: 

Envictus has sold the dairies and packaging businesses and the relevant intellectual

property to Asahi Group Holdings Southeast Asia Pte Ltd on 10 April 2014 for US$328,787,704.

Therefore, i can conclude that the management team is able to identify opportunities in area for investment.

4) Steep Discount to NTA.

In the latest quarter, the NTA is  RM$2.74 or abt S$0.90. The last traded price is S$0.53 as of 21st Oct 2016.