This article first appeared in The Edge Malaysia Weekly on September 15, 2025 - September 21, 2025

SDS Group Bhd (KL:SDS), a Johor Bahru-based manufacturer and retailer of bakery products, is in the process of acquiring Mamee-Double Decker (M) Sdn Bhd’s London and Tora snack brands and assets, marking its most significant acquisition since its listing.

The deal takes SDS beyond its core bakery operations of whole cakes and fresh pastries into the confectionery snack pie — a category with longer shelf life and broader distribution potential.

SDS chief financial officer Tan Kee Meng describes the acquisition as “a big project” as it propels the group into a new segment with growth potential, complements its existing business and gives it a stronger platform for the long term.

“What we are acquiring are the assets and brands of London and Tora from Mamee. These are established names in the market.

“Of course, profitability in this business comes down to volume and distribution reach, so our job now is to make sure these products are marketed effectively through our existing channels and new ones,” he tells The Edge in a virtual interview.

Tan acknowledges that the acquisition will not move SDS’s numbers “dramatically” over the short term, but he expects it to be “a meaningful contributor” to the group from the financial year ending March 31, 2026 and FY2027 onwards.

“Right now, we are already in September, near the end of our second quarter of FY2026, and the transaction should be completed by the end of this month or early next month. Once it is completed, we still need to go through integration, product development and market roll-out,” he says.

According to Tan, SDS is targeting only minimal revenue contributions from London and Tora at the initial stage. “If things go smoothly, the upside will be very exciting over time. Once the production scales up and we expand distribution, the numbers will grow. It really depends on how quickly we can bring the products back to full production and penetrate the market.”

In mid-August, SDS announced that its indirect wholly-owned subsidiary SDS Top Baker Sdn Bhd had signed definitive agreements with Mamee Bakery Sdn Bhd to acquire the latter’s seven parcels of land that come with factories, complete with production lines and related assets, in Plentong, Johor, for RM28 million.

Mamee Bakery is wholly owned by Mamee-Double Decker, the Melaka-headquartered food giant that produces household names such as Mamee Monster noodle snacks, Double Decker crackers, Mister Potato chips and crisps, as well as instant noodles and cup noodles.

It is worth noting that SDS’s asset acquisition is specifically Mamee Bakery’s entire production lines of machinery, equipment and tools for producing and packaging London and Tora swiss rolls, cream filled-layer cakes and other cakes.

Interestingly, London Roll used to be the flagship product of London Biscuits Bhd, a confectionery maker that was delisted from Bursa Malaysia in December 2020 after defaulting on its loans.

Through its unit Kinos Food Industries (M) Sdn Bhd, London Biscuits also made Tora, a toy box that featured a pencil-on-wheels character on its packaging and a snack inside.

As part of its liquidation and to generate cash, London Biscuits announced in May 2020 that it was selling seven parcels of freehold industrial land in Plentong for RM70 million to Pacific Petcare Sdn Bhd, a wholly-owned subsidiary of Mamee-Double Decker.

Now, just over five years later, Mamee-Double Decker is letting go of these assets, and as part of the deal, Mamee Bakery will provide SDS with recipes, production know-how, formulas and processes related to London and Tora products.

SDS’s acquisition of these assets is anticipated to be completed by the third quarter of FY2026. The purchase is to be funded through a combination of internally generated funds and bank borrowings.

As at end-June this year, SDS’s cash and cash equivalents stood at RM50.9 million against total borrowings of RM21.6 million, resulting in a net cash position of RM29.3 million. Post-acquisition, its net cash is expected to decrease to RM4.1 million.

Tan points out that this is not SDS’s first acquisition. “Back in 2008, we acquired a bakery wholesaling business, which we later rebranded as Top Baker. Then in 2016, we acquired Daily’s, which came with a plant in Seremban. We commissioned that plant and further expanded our wholesale bakery space.

“So, we have some track record of using acquisitions to grow. But this latest one is slightly different — it takes us beyond bread and cakes into the snack food segment. In terms of scale, this will be our biggest acquisition since our company’s listing.

“Going forward, we are no longer just a bakery manufacturer and retailer. We are also making confectionery snacks like Apollo Food Holdings Bhd (KL:APOLLO) and Oriental Food Industries Holdings Bhd (KL:OFI). But of course, Apollo and Oriental have larger product portfolios, as they are also into chips, biscuits and wafers.”

Tan says profit margins for snack food are “generally healthy”, especially if the manufacturers can achieve a certain volume. “Compared with the bakery, the economics are different. Bread and cakes are perishable, and there’s a daily cycle, so wastage management is critical. Snack food has longer shelf life and allows us to play at a bigger distribution scale. That’s where the potential lies.”

Tan goes on to say that SDS is taking a careful approach with this acquisition. “The first step is to stabilise production, because we are buying assets. That means restarting lines, understanding the product range, and making sure quality is consistent. From there, we will leverage our wholesale and retail network to push the products out.

“We also want to look at brand positioning — whether to revitalise the existing packaging, how to market to a younger generation, and how to tie the products to SDS’s brand presence. It’s not just a plug-and-play exercise; it will take product development and marketing effort.”

When asked whether SDS will be eyeing more acquisitions moving forward, Tan says the priority is to make sure the London brand can be well integrated into the group first. He hopes to grow this brand meaningfully before considering any further acquisition moves. “Acquisitions have always been part of our strategy, so we remain open to opportunities that align with our strengths. As a group, we are looking for steady growth.”

SDS may not be well known outside of Johor, but within the southernmost state, it has garnered a reputation as the go-to bakery, particularly among the lower-income group. It operates 42 retail outlets, comprising 19 bakery-only stores, two cafeterias and 21 bakery-cum-café outlets. Thirty-one of the outlets are located in Johor Bahru while the rest are in other states.

“Things have been going well. In our last financial year, we managed to open six new outlets and also acquired a delivery fleet to expand our wholesale operations. We just opened a new outlet in Selangor on Sept 9, bringing our total store count to 42,” says Tan.

This year, however, the expansion focus has been a little different.

“Instead of chasing a fixed number of openings per quarter, we are looking to revamp older outlets and selectively add new ones where the location makes sense. It is not about volume of expansion anymore, but about sustainability and positioning,” he says.

SDS has a fleet of about 340 trucks that supports the group’s wholesale distribution. It employs around 1,800 people, including those who work in the factories and shops, and truck drivers.

“This doesn’t include any employees from the London brand, as we won’t be absorbing any of them,” says Tan. The 37-year-old is the son of SDS co-founder and managing director Tan Kim Seng.

Kim Seng, 68, and his younger brother Tan Kim Chai, who is a co-founder and executive director of the group, are the major shareholders of SDS, each holding an about 24% stake in the company.

SDS’s top 30 largest shareholders include executive director Tan Yon Haw (the 48-year-old nephew of Kim Seng and Kim Chai), Kenanga Shariah Growth Opportunities Fund, Tan Sri Chua Ma Yu’s CMY Incubator Sdn Bhd, and PB Smallcap Growth Fund.

SDS’s revenue has nearly doubled from RM173.8 million in FY2021 to RM345.7 million in FY2025, reflecting the group’s consistent outlet expansion, stronger wholesale distribution network and resilient consumer demand for its bakery and café products.

Net profit has grown at an even faster pace — from RM7.3 million in FY2021 to RM33.3 million in FY2025. Margins have also improved meaningfully, climbing from just 4.2% in FY2021 to around 10% in FY2024, before easing slightly to 9.6% in FY2025.

For the first quarter ended June 30, 2025 (1QFY2026), SDS posted revenue of RM84.8 million and net profit of RM7.2 million, translating into a margin of 8.5%.

The company was listed on the ACE Market of Bursa Malaysia in October 2019, before it migrated to the Main Market in May 2023.

Notably, in May this year, SDS completed a bonus share exercise — one bonus share for every three existing shares — to reward shareholders and improve the trading liquidity of its shares.

Year to date, its adjusted stock price declined 18.4% to close at 73.5 sen last Wednesday (Sept 10) — down from 90.1 sen on Dec 31 last year — giving the company a market capitalisation of RM401.44 million. 

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