RAMPAI-Niaga Sdn Bhd, the franchisee for The Body Shop business in Malaysia, remains keen on an initial public offering (IPO) and is expected to submit a listing application to the Securities Commission Malaysia as early as this quarter, sources say.

“It would be for a Main Market listing,” a source tells The Edge.

The Body Shop managing director Datin Mina Cheah-Foong confirms that Rampai-Niaga intends to pursue a Main Market listing. However, she declines to comment on the expected timeline.

“It’s still early days, but yes, we’re aiming for a Main Market listing,” she says when contacted by The Edge. It is “difficult to say” whether the listing will happen this year or not, she adds.

It is understood that CIMB Investment Bank is working on the IPO.

Last December, Bloomberg reported that Rampai-Niaga was targeting to list on Bursa Malaysia as early as the second quarter of this year. The IPO could raise RM200 million, it said, citing unidentified sources.

However, because there were no developments on the matter, it gave rise to market talk that the retailer may have abandoned or deferred its plan.

Just two weeks ago, QSR Brands (M) Holdings Bhd — operator of the KFC and Pizza Hut chain of restaurants in Malaysia — announced that it was postponing its Main Market listing.

QSR Brands, which reportedly intended to raise RM2 billion from the IPO, said its management and shareholders had decided to “re-time” the exercise following discussions with its bankers.

Sources close to the transaction told The Edge Financial Daily that QSR’s IPO was deferred because key potential investors had deemed its valuation too high. The company had initially hoped to price its IPO at a “mid-20s” price-to-earnings (PE) multiple, but cornerstone investors were only willing to get on board for a PE multiple of 15 to 17 times, TEFD reported on April 11.

Maybank Investment Bank Bhd and RHB Investment Bank Bhd were the joint principal advisers for that offering.

Market observers say given the weak stock market in recent months, investors will be particularly sensitive to the valuation of new offerings. Thus, Rampai-Niaga’s upcoming IPO will be closely watched.

The planned IPO comes at a time when the retail industry is sluggish. Malaysia’s retail industry grew 3.9% last year, lagging behind gross domestic product (GDP) growth for the sixth consecutive year, according to Retail Group Malaysia, a retail consulting firm. GDP grew 4.7% last year.

Interestingly, however, pharmacy and personal care was the best subsector in the industry, growing 10.2% last year.

Nevertheless, Retail Group Malaysia expects an improved growth of 4.5% for the industry. This is within Bank Negara Malaysia’s GDP projection of 4.3% to 4.8% for this year.

The Body Shop is a cosmetics, skin care and perfume company based in West Sussex, the UK.

Rampai-Niaga is the sole franchisee for the business in Peninsular Malaysia and Sabah.

Cheah-Foong started her first store in Kuala Lumpur in December 1984, at the now-defunct Plaza Yow Chuan in Ampang. Today, more than 34 years later, she owns 88 stores and faces competition from relatively newer players like L’Occitane and Bath & Body Works.

Rampai-Niaga acquired the franchise in Sabah in 2015, according to its website.

The company made a net profit of RM28.47 million for the financial year ended Dec 31, 2017 (FY2017), which was 14% higher than the year before.

This was on the back of revenue of RM153.51 million, which was 7.3% higher than in FY2016.

Last year, there were only two Main Market listings on Bursa Malaysia — Mi Equipment Holdings Bhd and Techbond Group Bhd.

There has been none so far this year. The first one is expected to be that of Leong Hup International Bhd, the country’s largest poultry player, next month.

According to a Nikkei Asean Review report last Thursday, Leong Hup’s IPO is valued at a PE multiple of 15 times. The company’s prospectus is expected to be launched this week.