Borneo Oil Berhad (“BornOil”) is a Malaysia-based company engaged in investment holding with interests in four segments, namely restaurant, franchising and head office operations segment, general trading segment, management and operations of properties segment, and oil, gas and energy related businesses segment.
The Company’s subsidiaries include SB Resorts Sdn. Bhd., which provides management services, catering services, operates cafe and entertainment and rental of equipment; L & V Trading Sdn. Bhd., which is engaged in food processing and sales and distribution of equipment and spare parts; Borneo Oil & Gas Corporation Sdn. Bhd., which is engaged in oil, gas and energy and its related business; SB Partners Sdn. Bhd., which is engaged in investment holding, and SB Franchise Management Sdn. Bhd., which is engaged in the provision of management and marketing services.
BizVantage360 recently caught up with BornOil executive director Raymond Teo to elaborate on the Group’s various plans as it strives forward to realise the fullest potential of core businesses.
Question: For the investment community, how should they perceive BornOil as a group?
Our business divisions are critical to everyday living and businesses, namely:
- BornOil’s food franchise which is global in nature (more on this later)
- Gold mining and trading which is real and perpetual value in nature.
- Biomass conversion – in time to come, the BornOil Gourp will become a global player in the conversion of palm oil biomass, to biochar, biogas and biofuel. Malaysia and Indonesia have over 200m tons of palm oil biomass yearly, as both the countries together produce 85% of the world’s edible palm oil yearly.
- Limestone – main and monopolistic supplier of limestone to the cement industry in Sabah and the BIMP-EAGA.
- On the property front, the BornOil Group is itting on some of the most beautiful spots in Sabah with tremendous potential for lifestyle living and tourism.
Question: BornOil has been making share buybacks in recent times. What is the rationale for such exercises and do you think current share price levels is low?
Since the 4th quarter of last year, BornOil has been embarking on share buy-backs. As disclosed in filings to Bursa Malaysia, the latest buy-back involved some 500,000 shares which were bought between 7 and 28 February 2018 giving rise to some 124,896,000 purchased being retained in treasury. At times, companies embark on share buy-back exercises when they feel that their stock is undervalued on the open market.
Question: On the Group’s food and franchise operations, what plans are there for 2018? How many outlets are there currently and any other plans for Sugarbun and Prezzo?
Our Franchise Division has targeted setting up 40 “Broasted by SugarBun” kiosks this year under the new concept. Of those, 20 will be in Sabah, 15 in Peninsular Malaysia and 5 in Sarawak.
The management has identified several high-potential locations in various townships across Pahang, Penang, Perak and Johor to roll out the new concept kiosks and expects to open six by the second quarter of 2018. The first “Broasted by SugarBun” kiosk was opened for business in Gambang, Pahang in September last year.
As main cities are saturated with fast-food restaurants and good locations are hard to come by, SugarBun is looking at expanding to smaller towns where competition is less intense. This will help tap the potential of a market which has not been capitalized on by fast-food operators.
Home-grown SugarBun is targeting middle-income entrepreneurs through this micro business concept. Food kiosks based on the “Grab n’ Go” model have proven to be a significant revenue generator and offer attractive bottom lines. This new concept offers several advantages over full-sized SugarBun restaurants. As the kiosk requires a smaller space (minimum 400sq ft), it is easier to secure business locations, faster to set-up and much more cost-effective.
As franchising goes, it is affordable (below RM300,000) for an outlet, requires less labour and has low overhead. The kiosk concept offers a simple menu, and this is also reflected in operations, thus it would be easy to manage for the franchisee. For customers, they will be able to easily order food and have it served much more quickly, thus avoiding a long queue.
“Broasted by SugarBun” offers fresh products prepared on the spot at affordable prices. The larger kiosks will provide seats for customers to dine-in, while the others specialize in take-away services.
Meanwhile, SugarBun currently has 92 franchised restaurants, most of them in cities and secondary towns in Sarawak. There are SugarBun outlets across Brunei, Bangladesh and Australia. On top of that, there are currently 47 Pezzo outlets are in Malaysia, most of them located in Sarawak and Sabah.
Question: What about the menu: Any enhancements in store to complement what’s already available? What about plans for the Tong Meng brand in Malaysia and overseas expansion?
We will continue to innovate and introduce new items to attract existing and new customers. The group’s philosophy is to sell wholesome, authentic, less processed at affordable pricing – real food and drinks.
We are also active in our business and are always on the look-out for opportunities to grow and expand the Tong Meng brand in Malaysia as well as overseas. We have received enquiries from countries like Myanmar, South Africa and the USA so far and actively engage with potential investors from these countries.
Our brand Aunty Franklee in Australia has just opened another new outlet in Hawthorn, Melbourne. Aunty Franklee has been voted as one of the top places in Melbourne to enjoy good, authentic Malaysian food.