Johor-based wholesaler and distributor of fresh vegetables, food and beverage (F&B) products and other groceries, Farm Price Holdings Berhad (Farm Price) has successfully launched its prospectus today (Apr 24) in conjunction with its initial public offering (IPO) exercise on the ACE Market of Bursa Malaysia Securities.
Farm Price, through its subsidiaries (collectively, the Group), is principally involved in the wholesale and distribution of fresh vegetables, F&B products and other groceries. The Group also operates a retail store in Ulu Tiram, Johor selling fresh vegetables together with F&B products and other groceries directly to end-consumers.
Backed by a 20-year track record in fresh vegetable wholesale distribution, Farm Price currently operates its Senai Centralised Distribution Centre in Johor.
This facility consists of cold room facilities for storage, processing, and packing areas, alongside ambient temperature zones. The Group’s dedication to quality is demonstrated by its ISO 9001[1], GMP[2], and HACCP[3] certifications for its Senai Centralised Distribution Centre’s processing and packing operations.
Additionally, it also has the Halal certification for prepacked and fresh-cut vegetables, ensuring product integrity and larger market reach.
The Group’s operations is supported by 6 regional distribution centres located in Johor, Selangor, Perak, and Penang. These distribution centres focus on the wholesale distribution of F&B products and other groceries. Farm Price serves a diverse customer base, including resellers such as supermarkets, minimarkets, grocery stores, and wholesalers and end-user industries including food service operators, food manufacturers, and individual consumers.
Farm Price Managing Director Dr. Tiong Lee Chian said, “Our prospectus launch marks a pivotal moment for Farm Price. It demonstrates the team’s unwavering dedication for growth and excellence since our humble beginning 20 years ago when my spouse, Mdm. Liew Tsuey Er and I founded this business from scratch. .
“Through grit and perseverance, our reputation for reliability and quality has delivered consistent growth over the years. Now, with the upcoming proceeds from the IPO, we can accelerate our strategic expansion plans to grow much faster and capture the rising demand for fresh produce.”
“As part of our growth strategy, we plan to increase the built-up area of our Senai Centralised Distribution Centre from 78,721 sq. ft. to 149,548 sq. ft., constructing additional office space, cold room facilities, and ambient operational and warehouse areas. We will establish additional regional distribution centres with cold room facilities in Nilai, Negeri Sembilan and Cameron Highlands, Pahang, along with a new sales and marketing office in Singapore.”
Farm Price will also invest in new machinery and equipment to optimise workflow efficiency and automate processes. This is in anticipation of increase in customer orders, while simultaneously reducing reliance on manual labour.
The expected RM24.48 million proceeds to be raised are set to be utilised in the following manner:
The independent market research by Vital Factor Consulting Sdn Bhd states that the fresh vegetable industry is part of Malaysia’s food security agenda as it is an essential industry that directly affects the general population in terms of sustenance of life, health and cost of living.
“Therefore, it is my belief that we play a key role by ensuring stable supply of a variety of fresh produce to the public at affordable prices, demonstrating our commitment to the national agenda. This drives our continuous expansion and innovation efforts,” Dr. Tiong added.
The Group’s IPO exercise comprises the issuance of 102.00 million new ordinary shares in Farm Price constituting 22.67% of the Group’s enlarged share capital. Additionally, a private placement will be conducted for the offer-for-sale of 33.00 million existing shares, equivalent to 7.33% of the enlarged shares.
Out of the 102.00 million shares, 22.50 million Shares are available to the Malaysian public via balloting; 11.25 million Shares for eligible directors, employees and persons who have contributed to the success of the Group (Pink Form Allocations), the remaining 68.25 million Shares by way of private placements to selected investors.
Farm Price will have a market capitalisation of RM108.00 million upon listing based on an enlarged issued share capital of 450.00 million shares and an IPO price of RM0.24 per share.
For the financial year ended 31 December 2023 (“FYE2023”), the Group’s revenue increased 21.00% year-on-year (“YoY”) to RM114.20 million, whereas Profit After Tax (“PAT”) surged 83.28% YoY to RM8.70 million. The improved performance was attributed to higher contributions from both wholesale distribution and retail segments.
Wholesale distribution remains the Group’s primary revenue driver at 93.62%, followed by the retail segment at 6.38%. Geographically, export sales to Singapore comprised 25.46% of Group turnover, with the balance coming from domestic sales.
Meanwhile, the hike in FYE2023 PAT margin to 7.62% from 5.03% was largely attributed to favourable supply condition, revision in selling prices to Singapore and higher efficiency in prepacked vegetables.
Following the prospectus launch, applications for the public issue are open from today and will be closed on 30 April 2024 at 5:00 pm. The Group is scheduled to be listed on the ACE Market of Bursa Securities on 14 May 2024.
Alliance Islamic Bank Berhad is the Principal Adviser, Sponsor, Sole Underwriter and Placement Agent for the IPO Exercise.
