Is Khee San Finally Turning the Corner?

Bursa Malaysia-listed confectionery company Khee San has weathered a turbulent seven-year period. After posting profits in 2018, it slipped into losses by 2019. By 2020, revenue had collapsed to just 20% of its 2018 level, weighed down by financial distress, operational setbacks, and external shocks like the pandemic.

In 2021, the company was classified as a PN17 financially distressed entity. Its regularisation plan - only approved in 2024 - involved a comprehensive equity restructuring and fundraising initiative aimed at restoring financial stability.

Under the plan, Khee San’s share capital would range between RM 113 million and RM 167 million, translating to approximately RM0.07 to RM0.08 per share. The company has until August 2025 to complete the implementation of this plan.

While full recovery is still in progress, there are signs of operational improvement. Although revenue in 2024 remained flat compared to 2021, gross profit margins have shown an upward trend. This improvement has translated into operating profits since 2023, a notable turnaround from the operating losses reported in 2021 and 2022.

However, to generate a 10% return on the restructured capital base, Khee San would likely need to triple its 2024 revenue - assuming it can sustain its current gross margins and keep selling, general, and administrative (SG&A) expenses in check.

Achieving such growth will likely take several more years. In this context, the current market price of RM 0.30 appears to reflect a significant degree of optimism.