Oriental Food Industries : OFI - Q&A of 26th AGM

ORIENTAL FOOD INDUSTRIES HOLDINGS BERHAD

AGM 2022

QUESTIONS & ANSWERS

QUESTION 1

Mr. Chong Jit Shen, a shareholder of Oriental Food Industries Holdings Berhad ("the Company"), raised the following questions during the meeting:-

1(a) "What is the sales breakdown and percentage by product categories for the financial year ended ("FYE") 31 March 2022?"

1(b) "What are the current capacity and utilisation rate for each product category?"

1(c) "Given the cost of raw materials reduced, will the Company be able to increase the profit margin significantly in the future financial year?"

1(d) "What is the Company's capital expenditure plan for the subsequent five (5) years?"

1(e) "Based on the past years' financial result, the turnover of the Company was quite flat, thus, what will be the Company's plan in the future on the turnover?"

ANSWER 1(a), (b), (c) & (d)

1(a) Datuk Son Tong Leong ("Datuk TL Son"), the Group Chief Executive Officer presented the sales breakdown and percentage by product categories for the financial year ended 31 March

2022 as follows:

	FYE	Percentage
	2022
	RM'000	(%)
Snack food	92,516	32.11
Bakery products	42,032	14.59
Wafer	20,500	7.11
Potato based	118,404	41.09
Biscuit	14,499	5.03
Cookies	173	0.07
	288,124	100.00

1(b) Datuk TL Son explained that the current capacity and utilisation rate for each product category are as follows:

	Production	Current
Products	lines	utilisation
Snack food	6	70%
Potato Snacks	4	70%
Cakes	3	60%
Wafer	2	50%

ORIENTAL FOOD INDUSTRIES HOLDINGS BERHAD

AGM 2022

QUESTIONS & ANSWERS

Biscuit

1

34%

1(c) Datuk TL Son informed that the Company foresees an increase of the profit margin by approximately 8-9% in the financial year ending 31 March 2023 with the reduction in the cost of raw materials. However, if the price of raw materials increases in the competitive market the profit margin would be affected.

1(d) Datuk TL Son reported that the Company has invested RM11.575 million in the financial year ended 31 March 2022 as follows:

	FYE 2022
	RM'000
Buildings	-
Plant & Machineries	1,622
(Biscuits & Cookies)
Others	1,566
Total	3,188

Datuk TL Son further reported that the Company has budgeted approximately RM16.8 million for capital expenditure in the financial year ending 31 March 2023 as follows:

	FYE 2023
	RM'000
Buildings	10,000
Maintenance Cost	5,000
Others	1,816
Total	16,816

Datuk TL Son informed that the Company has vacant factory land for further expansion. The Company is in the midst of a discussion on the proposed construction of a warehouse and production buildings.

In addition, to cater for the housing needs of its Foreign Workers, construction of a 4-storey Foreign Workers hostel building has commenced and is expected to be completed by mid- 2023. The hostel can to accommodate approximately 800 workers.

1(e) Datuk TL Son reported that the flat turnover in the past few years was due to the Covid-19 pandemic as there were interruptions in the operations as a result of mandatory closure and due to the shortage of new workers.

However, the issue of the shortage of foreign workers may be resolved in due course as the government has recently allowed the recruitment of foreign workers into Malaysia.

Thus, the Company verily believes that there will be positive growth in the turnover in the coming years as the issue of shortage of new workers will be resolved and there are no mandatory closures due to the pandemic.

ORIENTAL FOOD INDUSTRIES HOLDINGS BERHAD

AGM 2022

QUESTIONS & ANSWERS

QUESTION 2

Ms. Lim Cian Yai, a proxy of the Company had inquired the following:-

2(a) "The Company ventured into the production of biscuit products in FYE 2018. What are the Company's strategies to increase the sales of biscuit products in the highly competitive market?"

2(b) "Did the Company increase selling prices for all product categories in FYE 2022 and up to date and will the Company adjust its price downwards in the future?"

2(c) "Which product categories would be the Company's key focus in the coming years?"

2(d) "Which export markets saw the biggest decline in sales since FYE 2019?

2(e) "When will the Company expect export sales to recover back to previous high?"

2(f) "Practice 5.9 of the Malaysian Code of Corporate Governance stipulates that 30% of the Board should comprise women. As of FYE 2022, there was no woman director out of the 6 directors on the Board. Does the Company intend to apply Practice 5.9, and if yes, by when?"

ANSWER 2(a), 2(b), 2(c) & 2(d):

2(a) Datuk TL Son responded that with the Company's competitive pricing, extensive advertising, and expanded distribution, the Company is positive that it will increase the revenues and growth rate for biscuit products in FYE 2023.

2(b) Datuk TL Son responded the Company had increased its prices for all products twice in FYE 2022 and the Company will analyze and where necessary adjust its pricing to be market competitive.

2(c) Datuk TL Son informed that the Company's key focus will be its biscuit products as biscuit products are relatively new and have a larger opportunity for expansion in the market.

2(d) Datuk TL Son informed that the biggest decline in the export market was in South America due to the increase in freight charges.

2(e) Datuk TL Son explained that the Company based on the Company's performance, the export orders are currently increasing, therefore, the export sales are moving in a positive direction. The Company is expecting the export sales to be recovered in FYE 2023.

2(f) Datuk TL Son informed that the Company is currently sourcing for a suitable woman candidate to be appointed as the Company's director and the appointment will be latest by June 2023.