KUALA LUMPUR: Vertically integrated bakery group RT Pastry Holdings Bhd is expanding beyond its Klang Valley base into other states to support growth following its RM16.48 million initial public offering (IPO).
Chief operating officer Tia Yu Hoo said the group currently operates 18 outlets, mainly in the Klang Valley, including a recently opened outlet in Taman Equine that has delivered encouraging performance. The group is planning to expand its network with the addition of four new outlets this year, followed by another three in 2027 as part of its gradual expansion strategy.
The group’s expansion will initially focus on other states within Malaysia, including Pahang and the East Coast, which Tia said offer significant growth opportunities due to relatively lower market saturation and untapped consumer demand.
“At this moment, we chose the East Coast because there is a lot of room for expansion, and we foresee strong consumer demand from this region,” Tia told a press conference after the company’s prospectus launch yesterday.
He added that the company’s expansion strategy will prioritise strengthening its presence across Malaysia, with plans to progressively enter other regions, including the southern states.
“Overseas expansion is part of our future plans. But we will first expand to other regions as we want to build a stronger domestic base before moving beyond Malaysia,” he said.
He said RT Pastry is considering a mix of locations for its new outlets, including shoplots and mixed developments comprising retail, residential and business components.
“We are still identifying suitable shoplots as well as mixed developments. These will form part of our target locations,” he said.
Tia said RT Pastry has significant headroom to support its expansion plans, with its existing manufacturing facilities currently operating below full capacity.
“The current utilisation of our manufacturing facilities is about 50% to 70%, so we still have a lot of room,” he said.
In the longer term, the group plans to invest in additional production facilities to support further expansion.
He said the group expects to significantly expand its manufacturing capacity, indicating that long-term growth will be supported by further investment in production capabilities.
“I can’t provide an exact figure at this point, but we expect our production capacity to potentially triple from current levels,” he said.
The group aims to raise RM16.48 million through a public issue of 91.54 million new ordinary shares via an ACE Market IPO.
Of the total proceeds, RM7.63 million (46.3%) has been allocated for the opening of new outlets, while RM0.9 million (5.43%) is earmarked for the purchase of new machinery and equipment.
Of the remaining funds, RM3.82 million (23.21%) will be used for the repayment of bank borrowings, while the balance of RM4.13 million (25.06%) will cover the estimated expenses associated with the listing exercise.
The company is set to debut on the ACE Market with an enlarged issued share capital of 339.04 million shares, representing a market capitalisation of approximately RM61.03 million based on the IPO price of RM0.18 per share.
Tia said RT Pastry has observed softer demand and shifts in customer spending, with more consumers becoming price-sensitive and opting for cheaper alternatives as weaker purchasing power affects overall spending.
He attributed the shift in consumption patterns partly to broader economic conditions and global uncertainties, which have weighed on consumer sentiment.
Despite the softer consumer environment, he said the group remains confident in proceeding with its expansion plans, indicating that core demand will remain intact even as discretionary spending moderates.
“The presence of multiple bakery brands in the market reflects continued demand for bakery products. It is still an everyday essential for consumers, so the demand is definitely there,” he said.
RT Pastry’s business remains heavily reliant on retail outlets, which contribute about 96% of total revenue.
The group is exploring ways to diversify its income streams through wholesale, corporate sales and OEM activities.
“Recently, we signed a distribution service agreement with HWC to expand our sales channels,” he said.
Wholesale currently contributes about 2.4% to 2.5% of the group’s total revenue, and the group aims to at least double this to around 4% to 5% over time as it expands its wholesale and distribution capabilities.
The stock is not currently Shariah-compliant, as halal certification has yet to be obtained for all its manufacturing facilities.
RT Pastry applied for halal certification for its existing plants earlier this year after delaying relocation plans, and the approval process is now underway.
Certification is expected to be obtained in stages, starting with its manufacturing facilities before extending to its outlets, with completion potentially within the year.
According to the company, once certification is secured, it could qualify for Shariah-compliant status as early as next year.
