That Bakery from Johor

SDS Group Berhad, a BMQ50 constituent that is in the bakery business, has not been getting much love these days.

If you are in southern Malaysia or Singapore, you will have seen their products in supermarkets, or you might have dined in their cafes.

It derives 60% of its revenue from the wholesale segment, with its main products being sliced breads, buns, cream rolls, muffins, cupcakes, and cakes under the brand names ‘Top Baker’ and ‘Daily’s’.

It also has a retail segment, operating bakery, cafe, and bakery-cum-cafe outlets.

The Beginnings

The company was started by two brothers as Sin Lee Hiang Bakery in Masai, Johor, in 1987.

Elder brother Tan Kim Seng was 30, and younger brother Tan Kim Chai was 25.

Four years later, business was so good that it expanded into 10 outlets, all bearing the brand name ‘SDS’, short for ‘Share, Dine, and Smile’.

Booms and Headwinds

The company was listed in October 2019, six months before COVID-19 hit the world.

Despite the pandemic, business was booming when the world reopened.

Pent-up demand boosted profit to RM32.5 million by 2024.

As profits rose, its share price rode the wave too.

In recent years, though, the macroeconomic environment has not been so kind. The wars in Ukraine and the Middle East have caused inflation in wheat and other food commodities. Government policies to increase the minimum wage and mandatory EPF contributions have raised costs.

For a company that prides itself on maintaining its affordable pricing strategy, it needs to increase efficiency and, when necessary, increase the sales price.

The Bankers and the Pilgrims

Despite these headwinds, the company’s underlying resilience began to attract the attention of major institutional funds.

One such fund is tied to Tan Sri Rashid Hussain. He started RHB Bank in 1990 and sold it 13 years later.

He was out of the limelight until 2023, when he asked to become the Chairman of Lembaga Tabung Haji.

In his own words, this was national service, and it was a thankless job.

Lembaga Tabung Haji’s investments had not been doing well, and at one point, its assets were less than its liabilities.

It invested too heavily in the oil and gas sector, and when oil prices crashed, its equity performance was badly affected.

Under Tan Sri Rashid, he said equities would play a bigger role again, but only as part of the portfolio.

In 2025, Lembaga Tabung Haji owned 0.68% of SDS Group Berhad.

A bakery is not a cyclical business. Rain or shine, people still need to eat.

The next time you buy a ‘Top Baker’ cake, know that you are helping to pay for the Haj trips for B40 and M40 pilgrims in Malaysia.