5 Things To Know About Envictus International (SGX: BQD), Exclusive Franchisee Of US-Based Texas Chicken In Malaysia And Brunei

Founded in 1997, Envictus International (SGX: BQD) is an F&B group with a diversified portfolio of food services brands and strong distribution network in Malaysia.

Having built up brand names including Texas Chicken and SFCoffee throughout Malaysia, Envictus has a track record for strong marketing capabilities – from price and menu optimisation, to implementation of digital initiatives and targeted promotions to optimise sales. It currently operates 93 Texas Chicken restaurants and 50 SFCoffee cafes.

Envictus also collaborates with dealers, wholesalers, retailers and on-site customers – including hypermarkets such as AEON Big, Lotus as well as Giant and Econsave, and are serviced by sales offices cum warehouses in major cities across Malaysia. This is supported by an extensive export network where its SuJOHAN dairy brand is gaining widespread acceptance in overseas markets.

Here are 5 things you should know about Envictus International operations spanning its Texas Chicken and SFCoffee outlets, as well as its dairies and frozen food business.

#1 Envictus International is a diversified Food & Beverage (F&B) company, what is the Group’s product shelf today?

As an established F&B Group, we offer a wide portfolio of businesses and brands operating under three key business divisions – Food Services, Trading and Frozen Food and Dairies.

• Food Services Division – We have held exclusive rights to the Texas Chicken Franchise Agreement since 2012, and renewed the franchise for a second 10-year period starting May 2022, to develop and operate the Texas Chicken fast food restaurant chain in Malaysia and Brunei. The Group plans to develop another 125 Texas Chicken restaurants to reach 200 outlets in Malaysia and 10 outlets in Brunei by 2030. We also own Malaysian homegrown specialty coffee chain business, San Francisco Coffee (SFCoffee) which serves house-roasted coffee in Malaysia. Presently, the Group operates 93 Texas Chicken restaurants and 50 SFCoffee cafes.
• Trading and Frozen Food Division – Our wholly-owned subsidiary, Pok Brothers Sdn Bhd, is one of Malaysia’s leading frozen food and premium food wholesalers and a supplier to several major restaurant chains, hotels and supermarkets in Malaysia.
• Dairies Division – We manufacture condensed milk under the SuJOHAN brand, held by our wholly-owned Motivage Sdn Bhd. The Group has attained the HALAL and VHM certifications in 2021 and 2023 respectively, to capture emerging opportunities with plans to export globally.

#2 What are Envictus’ key growth opportunities over the next few years?

Our focus is to enhance sales and grow Envictus, coupled with financial prudence and proactive cash management, to deliver sustainable growth and value to our shareholders.

For Food Services, the Group will leverage on robust demand to grow our presence, with a further expansion of 8 new Texas Chicken outlets and 5 new SFCoffee cafes in FY2024, to enhance revenue and earnings streams.

For Dairies, we continue to provide competitive pricing, alongside market penetration of the SuJOHAN brand into major hypermarket chains. Through active marketing, our products have entered major hypermarket chains including AEON Big, Lotus ,Giant and Econsave, which significantly enhanced brand awareness. We continue to penetrate more chains and in East Malaysia to enhance brand awareness for our dairy products.

Source: Envictus International

We will continue to explore expanding into overseas markets for our Dairies Division, given its increasing market acceptance and branding profile both locally and abroad.

For Trading and Frozen Food, we continue to increase e-commerce sales by tapping on digital marketing and price reviews, to navigate challenges and drive sustainable growth. Regarding Food Processing, we have concluded the divestment of the loss-making bakery and butchery businesses, and will be directing resources to other group companies as part of our streamlining efforts. The first tranche of proceeds received has been used to pare down bank borrowings, with the balance proceeds of RM34 million expected to be received in April 2025.

Overall, to stay competitive, we will continue our active pursuit in various business strategies, and enhance efficiency through implementation of cost-control measures to achieve revenue growth.

#3 Describe Envictus’ recent financial performance?

We are pleased to have achieved profitability turnaround of RM16.4 million for the six months ended March 2024 (1HFY2024), from a net loss of RM12.5 million in the previous corresponding period (1HFY2023).

This was mainly driven by strong revenue growth, increasing 12.2% to RM314.1 million in 1HFY2024, from RM280.1 million in 1HFY2023, attributed to the increased contributions from both the Food Services and Dairies Divisions.

Of note, our best-performing Food Services Division saw a 22.7% uplift in revenue to RM185.2 million, contributing close to 60% of 1HFY2024 revenue. As for our Dairies Division, it contributed close to 20% of our revenue for 1H2024, surging 34.1% to RM62.4 million year-on-year (y-o-y), driven by volume growth and growing market penetration.

#4 How have disruptive technologies like artificial intelligence (AI) and machine learning changed the way the Group carries out its business, and what are the benefits that resulted from that?

Integrating state-of-the-art Point-of-Sale (POS) systems and adopting contactless ordering methods, such as the innovative Store Operations Kit (SOK), have enhanced operational efficiency and elevated the overall customer experience. These technologies streamline transactions, reduce wait times, and provide customers with a seamless ordering process.

Texas Chicken is concurrently exploring the development of a functional app with loyalty programs and the functionality to order ahead for pick-up. This initiative aims to further enhance customer convenience, contributing to increased satisfaction and loyalty.

Meanwhile, continual efforts are underway to increase e-commerce sales by leveraging digital marketing to drive traffic flow to Pok Brothers Easy Store platform, alongside the implementation of a loyalty programme to stimulate consumer spending.

To stay competitive in the modern business landscape, the Group is committed to embracing digital trends by implementing an upgraded Live Order web ordering platform to provide our customers with a seamless and convenient dining experience.

#5 What is the Group’s biggest risk or challenge in the next 1-3 years that shareholders should be most concerned about? And how is the Group preparing itself for it?

Our biggest challenge is the need to constantly evolve to meet changing consumer tastes. Whilst we strive to achieve the highest quality in the products, the level of market acceptance of our products ultimately relies on consumer taste and lifestyle such as the current consumer trend towards healthier lifestyle and organic products, which may pose threats to our Group’s business if we are not flexible enough to adapt and cater to the trend. We tackle this in 4 ways:

– Menu innovation – to include healthier options, such as reducing sugar levels in our recipes and lower calorie alternatives

– Menu customisation – by offering customisable menu options to cater to consumers’ dietary needs and preferences. This flexibility helps us attract and retain a broad customer base.

– Sustainable sourcing – to source ingredients from sustainable and ethical suppliers which supports environmental sustainability and ensures the quality of our products.

– Incorporating customer feedback and engagement – this allows us to stay ahead of trends and adapt our offerings accordingly.

Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 11 June 2024 and have been republished with permission. You can read more on Envictus International (SGX: BQD) on the SGX website.

Read other featured companies from SGX’s 10 in 10 series on the DollarsAndSense website.

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