PETALING JAYA: SDS Group Bhd
, which saw its net profit grow at a three-year compound annual growth rate of 72%, is currently trading at a trailing core price-earnings ratio multiple of 12 times.
According to Affin Hwang Investment Bank Research, SDS reported a 14% and 36% year-on-year increase in its 2024 revenue and core net profit to RM324.1mil and RM33.8mil, respectively.
“This growth was primarily driven by expansion at both its wholesale and retail segments, underpinned by an expanded distribution network in the wholesale segment coupled with an increased footfall in stores,” the research house added.
Johor-based bakery SDS specialises in the manufacturing and distributing of bakery products while also operating 38 food and beverage outlets that are mostly located in Johor, where it has 32 outlets, and the remaining six in the Klang Valley.
Of the total, 18 operate under a bakery-cum-cafe concept, one is a cafe and 19 are pure bakery shops.
Its wholesale segment, which contributes 60% of SDS’ sales, features brands such as Top Baker and Daily’s.
SDS owns a fleet of 300 trucks and has 21 distribution centres throughout Peninsular Malaysia, excluding Perlis.
“Rising preference for bakery products and steady population growth have aided SDS’ past growth.
Its ongoing plans to expand the number of its delivery vehicles across the central and northern regions allow it to cater to increasing demand for packaged bakery products.
“Importantly, as its products are more attractively priced, SDS offers a value-for-money proposition for budget-conscious consumers,” the research house added.
It said the bakery-cum-cafe concept also enhances convenience for consumers and meets a broader range of dining preferences and consumer needs.
For its retail segment, SDS leverages its established outlets in Johor to capitalise on the region’s growing economy and the spending power of Singaporean visitors.
“Looking to expand nationwide, management aims to open five additional outlets in 2025, focusing on high foot traffic areas in Kuala Lumpur, Selangor and Johor,” the research house said.
