Sabah-based Life Water Berhad to be listed on Bursa Malaysia

KOTA KINABALU (Oct 22): Sabah-based beverages company, Life Water Berhad on Tuesday unveiled its initial public offering (IPO) prospectus, in conjunction with its proposed listing on the Main Market of Bursa Malaysia Securities Berhad (Bursa Securities).

The official “gong hitting” is scheduled on November 13, 2024.

Started the business 22 years ago with just 5,000 bottles of purified water production daily, Life Water Berhad has demonstrated significant growth, with revenue from beverage products increasing from RM103.53 million for the 12-month financial year ended (FYE) June 30, 2021, compared to RM166.53 million in FYE 2024, reflecting a compound annual growth rate (CAGR) of 17.2 per cent.

“This prospectus launch marks a new chapter, one that reflects our growth, resilience and the bold vision that has guided us since our humble beginnings.

“We are a home-grown beverage manufacturer focusing on drinking water and carbonated drinks.

“As a company rooted in Sabah, we distribute our beverages to a wide range of customers, including retailers, wholesalers, food service operators, hotels and end consumers, with a strong emphasis on making our products accessible throughout the Sabah region,” said Managing Director of Life Water Berhad, Liaw Hen Kong.

The company’s distribution network spans over 3,250 retail outlets, 520 food service outlets, 150 wholesalers and 100 hotels across Sabah, ensuring broad market coverage.

Next year, the market is expecting new range of flavoured drinks under the “Mandak” brand, a popular word used as a synonym of Sumandak (means girl in Kadazan Dusun language).
Life Water is also planning to venture into the production of mineral water.

This plan is still in its preliminary exploratory stages and a suitable groundwater source has not been identified as yet.

Being well positioned for growth, Life Water targets to raise gross proceeds of approximately RM63.42 million via the issuance of 97,563,000 new ordinary shares at an IPO price of RM0.65 per share.

Based on the company’s enlarged share capital of 473,179,500 shares at the aforesaid IPO price, the market capitalisation of the company will be approximately RM307.57 million.

The company’s shares have been classified as Shariah compliant by the Shariah Advisory of the Securities Commission Malaysia, and it targets a dividend payout ratio of not less than 20% of its annual audited profit after tax attributable to the shareholders of the company.

Life Water and its group of subsidiaries are principally a manufacturer of beverages namely drinking water and carbonated drinks. The Group is also supported by its other business activities including the manufacture of plastic packaging, as well as delivery and distribution services, with key operations based in Sandakan and Kota Kinabalu.

The company markets its beverages under the brands, K2, Sasa, Sabah Water, 2more and TRITONiC while also contract manufacturing private label products.

The company plans to leverage its strong market position to explore new opportunities in Sarawak and Brunei. To support its growth strategy, the IPO proceeds will be allocated as follows:
(i) 30 per cent to set up an additional drinking water manufacturing line at Sandakan Sibuga Plant 1;
(ii) 18.9 per cent for the purchase of a new drinking water manufacturing line at Sandakan Sibuga Plant 2;
(iii) 19.9 per cent to set up a second distribution centre in Sandakan;
(iv) 15.1 per cent will be invested for the expansion of the existing plastic packaging facilities in Kota Kinabalu;
(v) 6.6 per cent will be allocated for working capital; and
(vi) 9.5 per cent will cover estimated listing expenses.

Approximately 84 per cent of the total proceeds raised is allocated for business expansion purposes, reinforcing the company’s commitment to sustainable growth and operational efficiency.

The Group recorded revenue of approximately RM166.53 million in FYE2024 as compared to RM150.96 million in FYE 2023. Gross profit margins for the FYE 2024 stood at 48.1 per cent, aligning with the historical range between 42.6 per cent to 46.2 per cent recorded across FYE 2021, FYE 2022 and FYE 2023.

The Group achieved a profit after tax (PAT) of RM28.1 million in FYE2024, compared to RM17.7 million in FYE 2021, reflecting a 16.8 per cent CAGR. PAT margins remained healthy, standing at 16.9 per cent for FYE2024 and ranging from 13.0 per cent – 17.1 per cent between FYE2021 to FYE2024.

Liaw added, “We are proud to serve a wide range of customers across Sabah, offering both drinking water and carbonated drinks. Our strategically located facilities, including our headquarters in Sandakan and operations in Kota Kinabalu, enable us to meet growing demand efficiently.

“With a competitive edge anchored in a wide distribution network covering 4,020 touchpoints, we provide exceptional convenience and accessibility to customers. While the production process is fully automated, social and economic tailwinds in Sabah’s beverage sector have driven business expansion, creating numerous job opportunities in area such as logistics, operations and management.

“This growth fosters community development and provides meaningful employment for local talent,” he added.

Over the years, Life Water has been honored with several prestigious awards, such as the ‘First rPET Bottled Water Manufacturer’ by the Malaysia Book of Records and the ‘Industry Excellence Award 2022/2023’ from Sabah’s Ministry of Industrial Development and Entrepreneurship.

Liaw further explained the latest recognition, the ‘Malaysia Smart Manufacturing Award 2023,’ reflects the company’s commitment to innovation and readiness for IR4.0.

“With an 11 per cent market share in Malaysia’s bottled water market, we are set to expand further, especially with our new Keningau plant coming online in December 2024.

“Our IPO proceeds will fund key expansions, including additional manufacturing lines and new distribution centres. Looking ahead, we plan to grow our presence in Sarawak, Brunei and beyond, while also diversifying our product portfolio.

“The increasing demand for beverages, supported by rising household income and tourism in Sabah, positions Life Water for continued success,” Liaw further explained.

Life Water Executive Director Chin Lee Ling said the company is committed to staying connected with its consumers.

“We believe our connection with customers ensures that we remain a prominent player in the beverage market. We continuously strive to capture new opportunities and expand our reach, as seen by the growing number of customers year after year.

“However, our vision also extends beyond financial success. At Life Water, we are deeply committed to sustainability and responsible business practices.

“In 2022, we became the first rPET bottled water manufacturer in Malaysia, a recognition that reflects our dedication to reducing environmental impact.

“Our ‘K2 Goes Green’ activities are actively promoting recycling efforts, and we plan to scale up these efforts through large-scale plastic recycling initiatives in Sabah’s major cities,” she said.

“As we look ahead, we remain committed to creating a positive impact on society and the environment, while delivering high-quality, affordable beverages,” she added.

Meanwhile, Deputy Chief Executive Officer of MIDF Amanah Investment Bank Berhad, Datuk Seri Diraja Nur Julie Gwee Ariff, in her speech said Life Water’s Board of Directors and key management bring a wealth of expertise and vision, laying a strong foundation for sustainable growth and long-term success.

“We are honored to play a pivotal role in this monumental chapter of Life Water’s journey, serving as the principal adviser, underwriter and placement agent.

“Having witnessed their remarkable trajectory of success, we are confident that this listing will provide new opportunities for expansion and innovation, reinforcing their position as a prominent and trusted player in the beverage industry,” she said.

The public portion of the IPO will be made available from October 22 and application will close on October 30, 2024 at 5pm.

MIDF Amanah Investment Bank Berhad is the Principal Adviser, Underwriter and Placement Agent to Life Water for the listing exercise.

Minister of Industrial Development and Entrepreneurship, Datuk Phoong Jin Zhe was also present at the event, witnessing the IPO briefing after the unveiling ceremony.