Malaysia-based grocery retailer KK Supermart & Superstore is exploring strategic options including a potential sale of its KK Mart grocery store business, said two sources familiar with the matter.
Talks for a sale mandate are still preliminary and there is no formal process yet, said the first source.
KK Mart recorded net profit of around MYR 40m (USD 10m) last year, said the sources. The second source added that the forward earning multiple for the industry is around 6x EBITDA. According to the sources, other options may see the group listing its KK Mart grocery store business on the local bourse.
The sources added that the KK Mart grocery store business might not offer much in terms of unique selling points, but its extensive reach and high number of stores might help it fetch a premium.
KK Mart is ranked as the second largest mass market grocery retailer in terms of store count with some 680 stores throughout the country, just behind market leader 99 Speedmart, which has more than 2,000 outlets in Malaysia, according to a local news report.
KK Supermart & Superstore falls under the umbrella of KK Group, founded and controlled by the Chai family, led by Managing Director KK Chai. Besides retail, KK Group also has interests in the F&B, leisure and hospitality businesses.
KK Mart did not reply to a request for comment.
In July last year, KK Group diversified into the convenience store business when it inked a collaboration with South Korean convenience store group GS25 to open up a chain of GS-branded stores in Malaysia.
Grocery retail has seen active deal flows in the past two years. The latest major deal in the grocery and retail space saw the sale last week of the Malaysian business of Hong Kong-based Dairy Farm International (DFI) to local investors, led by the owner of retailer GAMA Group, as per local news report.
DFI operates a chain of hypermarkets and supermarkets under the Giant, Mercato and Giant Mini brands, which are under its local unit GCH Retail (Malaysia), as reported.
Prior to that, Trendcell, which is the owner and operator of premium grocery chain Jaya Grocer, sold the business to Singapore-based tech firm Grab Holdings [NASDAQ: GRAB] for MYR 1.8bn (USD 438m) in December 2021, as reported.