No ice cream scoop just yet

IT’S been a year since Datuk Cheah See Yeong, known in local food and beverage (F&B) circles as the owner of Malaysia’s Baskin-Robbins business, bought into Apollo Food Holdings Bhd.

As an old F&B manufacturer in need of innovation, the latter is well-known to many Malaysians for its nostalgic chocolate wafer products.

After paying RM238mil for a 51% stake in the confectionery maker, See Yeong had spent another RM120mil in mopping up more shares in Apollo Food following the triggering of a mandatory general offer last January.

See Yeong then controlled 78% of Apollo Food, a stake which needed to be diluted in order for the company to not breach the 25% free float requirement.

While the market had expected a share placement exercise, See Yeong instead took the route of merely selling down his shareholding to hold 74.79%, Bursa Malaysia filings indicate.

See Yeong, through Scoop Capital, fully owns Golden Scoop Sdn Bhd, the master franchisee for Baskin-Robbins in Malaysia and Singapore.

Having secured the franchise rights over 30 years ago, he opened the first Baskin-Robbins store in Subang Parade, and has since expanded the network to 158 outlets in Malaysia and eight in Singapore.

Baskin-Robbins is said to hold a substantial market share in the premium ice cream industry in Malaysia and Singapore. The group says it serves close to six million customers annually and employs over 900 people.

It does seem that Baskin-Robbins in Malaysia and Singapore is still at the growth stage of its business.

Golden Scoop’s revenues hit RM180mil for its financial year ended April 30, 2024 (FY24), but it posted a loss of RM3.6mil for that period.

In the previous year, it recorded a revenue of RM179.7mil and a net profit of RM11.2mil. This is according to Companies Commission Malaysia data.

Back to Apollo Food, ever since See Yeong bought into the company, there had been speculation that his plan would be to inject the Baskin-Robbins business into the company.

For this, it would seem that the entry of a strategic shareholder into Apollo Food prior to buying the Baskin Robbins business would make sense, given that it would widen the share base of the company as well as provide it with funds for the deal.

Further, it would enable See Yeong to be paid partly in shares of Apollo Food without having to impact the company’s free float thresholds.

However, in written replies to StarBiz 7, See Yeong’s son, Cheah Jia Ming, the managing director of Apollo Food, dismissed this speculation, stating that the management has no such plans at this juncture.

He explains that the plan is to drive the growth of Apollo’s existing business.

“We have regulated our public shareholding spread, and at this stage we are not actively seeking strategic shareholders.

“Our priority is executing our growth strategy and building a strong foundation for Apollo’s long-term success,” he says.

Meanwhile, Apollo Food has a healthy balance sheet with RM105mil in cash and no debt. It trades at a historical price-to-earnings (PE) multiple of 14.41 times and has a dividend yield of 9% although it has paid out less dividends recently.

Its profits for the last few financial years have been fluctuating. For its nine months ended Jan 31, 2025, profits were down 36% from a year before to RM30.72mil.

The reasons cited for this drop are a lower gross profit margin and a one-off disposal gain in the third quarter of FY24.

What led to the acquisition of a stake in Apollo then, Jia Ming says, was the immense potential that they saw in the brand.

“Our initial vision is to modernise Apollo and broaden its appeal across diverse demographics, making it relevant for future generations while preserving the heritage that consumers associate with the brand.

“This means revitalising the brand through product innovation, stronger market positioning, and strategic expansion,” he says.

Over the past year, Jia Ming affirms that this vision has remained consistent and that the initiatives are “progressing well, though full implementation will take more time.”

As part of the management’s efforts to modernise Apollo, the company is working on new product innovations, which include enhanced packaging and new product variations.

At the same time, strengthening brand equity to develop new export markets and customer segments are also the group’s priorities.

“Domestically, we are strengthening our distribution network and adopting a proactive market approach, particularly in the modern trade segment, while also investing in product innovation and marketing to reinforce Apollo’s position in Malaysia.

“Internationally, we are exploring partnerships with established distributors and retailers in new markets to strategically expand our global footprint,” Jia Ming says.

Despite See Yeong’s statement that their privately-owned Baskin Robbins business will not be injected into Apollo Food “at this juncture”, it is still something that could be on the drawing block.

Or the asset could be listed separately or sold to private equity investors.

Consumer plays are often favoured by investors, especially private equity players.

It is also interesting to note that in 2023, Farm Fresh Bhd bought into The Inside Scoop Sdn Bhd, paying a price that worked out to a PE of around 16.5 times of the latter, according to a report by Maybank Investment Bank Research.

Inside Scoop is a prominent Malaysian artisanal ice cream chain, known for its local flavours and which has also been expanding into the region.

Analysts had viewed the purchase to be earnings-accretive with various business synergies in the form of product cross-selling opportunities, regional stores expansions and wider product distribution network capabilities.