SDS to ride on bread boom with Mamee Bakery acquisition: Publicinvest

New Straits Times

2 days ago

KUALA LUMPUR: SDS Group Bhd's acquisition of Mamee Bakery Sdn Bhd's assets in Johor is being viewed as a strategic bet on Malaysia's fast-growing bread and bakery market, which is expected to hit US$8.2 billion in 2025.
Public Investment Bank (PublicInvest) said the RM28 million deal not only strengthens SDS's manufacturing base but also positions the group to capture rising demand for convenience-driven food products.
According to Statista, the domestic bread and bakery market is projected to expand at a compounded annual growth rate (CAGR) of 5.6 per cent between 2025 and 2030, supported by shifting dietary trends, health awareness and the convenience of bread as a carbohydrate alternative.
SDS' indirect subsidiary, SDS Top Baker Sdn Bhd, will acquire seven parcels of land and factories in Plentong, Johor Bahru, for RM26 million. The group will also purchase production lines, machinery, equipment, trademarks, recipes and proprietary know-how tied to Mamee Bakery's operations for RM2 million.
The assets cover full production lines for popular products such as London/Tora Swiss Roll, layer cakes and bear cakes, alongside Mamee's bakery-related intellectual property and goodwill.
PublicInvest noted that SDS' strong net cash position of around RM27 million ensures funding is not a concern.
SDS, already a key manufacturer and distributor of bakery goods with two plants in Kempas, Johor, and Seremban, Negeri Sembilan, remains largely under the control of the Tan family. The company's two biggest shareholders, Tan Kim Seng and Tan Kim Chai, hold stakes of 24.3 per cent and 24.2 per cent, respectively.
In a stock exchange filing last week, SDS said that the acquisition aligns with its long-term strategy to scale operations, expand into new product segments and enhance export potential.
The group targets the mass market under its wholesale brands Top Baker and Daily's, distributing across Peninsular Malaysia and Singapore via its own logistics network. Top Baker products are typically sold in sundry shops and groceries, while Daily's products are available in hypermarkets, supermarkets and convenience stores.
PublicInvest said the acquisition will complement SDS' existing distribution strengths, broaden its product portfolio and unlock synergies through resource sharing and greater operational efficiency.
"We believe that it will generate synergies by broadening SDS' product portfolio while enhancing operational scalability under the same distribution network," PublicInvest said, maintaining an Outperform rating on the stock with an unchanged target price of 88 sen, based on 12x CY26F EPS.
The research house added that the proximity of SDS' Kempas and Plentong facilities could drive further cost optimisation while boosting manufacturing capacity. This also aligns with the group's strategy to grow export sales through products with longer shelf lives.