Our competitive advantages and key strengths are important in sustaining our business and providing our Group with future business growth and opportunities. These include the following:
We provide market access and coverage of a wide range of CPG covering F&B products, personal care products, household products, baby care products as well as OTC drugs and health supplements.
Subsequent to LPD, we distribute approximately 10,348 stock keeping unit (SKU) of CPG covering various locations within Sabah, Sarawak and Labuan. One SKU represents one distinct product or stock item that can be purchased. Subsequent to LPD, we carry five (5) major product portfolio:
As a provider of market access and coverage of CPG, our core competency is in the distribution of a proliferation of third party brands across various product categories. As at LPD, we distribute approximately 194 third party brands of CPG for 36 brand owners inclusive of respective appointed distributors of brand owners.
As the general public is the end-consumer of CPG, having a wide distribution network is key in ensuring that the products we cover reach as many consumers as possible. In this respect, for FYE 30 June 2015, we have a customer base that includes 4,604 retailers namely hypermarkets, supermarkets, departmental stores, sundry shops, convenience stores, pharmacies, petrol kiosks, Chinese medical halls, and 96 wholesalers and distributors, as well as 1,239 food service operators in East Malaysia. Our wholesalers utilise their own existing network to resell CPG to smaller merchants.
In addition, our business is supported by a total of 18 distribution centres in Sabah namely Kota Kinabalu, Sandakan, Tawau, Lahad Datu, Kudat and Keningau as well as in Sarawak namely Kuching, Sibu and Miri, and Labuan. As at LPD, we have 13 distribution centres to cover 21 districts in Sabah, three (3) distribution centres to cover 27 districts and nine (9) sub-districts in Sarawak as well as two (2) distribution centres to cover Labuan. This is inclusive of wholly owned, rented and outsourced facilities. Some of the distribution centres are equipped with warehousing facilities, some with cold room storage facilities to cater to the distribution of various types of CPG including F&B products, personal care products, household products, baby care products, as well as OTC drugs and health supplements.
As a provider of market access and coverage of CPG, our sales and distribution points for the financial years under review grew at an AAGR of 30.60% from 2,678 sales and distribution points for FYE 30 June 2012 to 5,965 sales and distribution points for FYE 30 June 2015. Sales and distribution points are an indication of our ability to increase the market access and coverage of CPG. Sales and distribution points are our final delivery destinations from our distribution centres, which includes retail outlets, food service outlets, wholesalers and distributors. As at LPD, we have access to 6,419 sales and distribution points.
We believe that our distribution network is a competitive advantage as it enables us to extend our product reach within the East Malaysia market.
We have a proven and established track record with a history that spans approximately 40 years since the commencement of KTC Sdn Bhd in 1975. As a further testament of our track record and performance, we have obtained numerous awards and recognition from our suppliers including among many others, "Special Recognition Award (Sales)" from P&G, "Appreciation of 30 Years of Business Partnership in Sabah" by Hawley & Hazel Marketing (M) Sdn Bhd, "Best Achievement Award" by KFC Marketing Sdn Bhd (now known as QSR Trading Sdn Bhd) and "Preferred Dealer" awarded by GlaxoSmithKline Consumer Healthcare Sdn Bhd.
We have established long-term business relationships with our suppliers. As at LPD, our track record with our suppliers which include brand owners as well as their respective appointed distributors, are as depicted in the following:
|Our Track Record||Our Suppliers *|
|30 years or more||Hawley & Hazel Chemical Co (HK) Ltd, P&G, Summit Co (M) Sdn Bhd, Tohtonku Sdn Bhd and Wipro Unza (Malaysia) Sdn Bhd.|
|10 to 29 years||Alliance Cosmetics Sdn Bhd, Cottrich Marketing Sdn Bhd, Ethye Sdn Bhd, Gan & Sons Trading Sdn Bhd, Jetaine Corporation Sdn Bhd, Kara Marketing (M) Sdn Bhd, Leung Kai Fook Medical Store and O'Seeker Marketing Sdn Bhd.|
|5 to 9 years||Auric Chun Yip Sdn Bhd, Danone Dumex (Malaysia) Sdn Bhd, GlaxoSmithKline Consumer Healthcare Sdn Bhd, Groupe SEB Malaysia Sdn Bhd, LH Sales and Marketing Sdn Bhd, QSR Trading Sdn Bhd, Rich Products (M) Sdn Bhd and Susu Lembu Asli Marketing Sdn Bhd.|
|Less than 5 years||Asia Food and Beverage Sdn Bhd, Bake With Me Sdn Bhd, Coca-Cola, DKSH Malaysia Sdn Bhd, Ginvera Marketing Enterprise Sdn Bhd, Indofood (M) Industries Sdn Bhd, Kimberly-Clark Trading (M) Sdn Bhd, L'Oreal Malaysia Sdn Bhd, McCain International Inc, Network Foods Sdn Bhd, Novel Link Malaysia Sdn Bhd, Philips Malaysia Sdn Bhd, Shiseido (Malaysia) Sdn Bhd, Wang Sheng Food Trading and Wang-Zheng Corporation Sdn Bhd.|
* Our suppliers consist of brand owners as well as their respective appointed distributors.
Our proven track record will provide us with the platform to compete effectively and grow our business in the future.
We benefit from economies of scale arising from the bulk distribution of a range of CPG including F&B products, personal care products, household products, baby care products as well as OTC drugs and health supplements. The bulk distribution of CPG enables us to spread our fixed costs across a large volume of products, and may provide us with the bargaining power to obtain better commercial terms with regards to product costs, credit terms, logistics arrangements and others.
The extensive experience of our Directors and key management personnel form a competitive advantage for our Group in terms of our market understanding and market knowledge, established customer and supplier relationships. Their experiences have been and still continue to be instrumental to the success, growth and development of our Group. Our Non-Independent Managing Director, Datuk Lau has approximately 40 years of experience in the distribution industry, while our Non-Independent Executive Directors, Dexter Lau and Lim Hui Kiong have approximately 12 years and 33 years of experience respectively.
* Please read this section in conjunction with the Section 6.1 from page 58 to page 61 of Kim Teck Cheong Consolidated Berhad’s Prospectus dated 28 October 2015.