Farm Price Holdings Bhd (KL:FPHB) opening shares surged 100% in its trading debut on Bursa Malasia’s Ace Market today (May 14) after the company’s initial public offering (IPO) raised RM24.48 million.
Farm Price opened at 48 sen on a volume of 7.67 million shares versus its IPO price of 24 sen apiece before climbing as high as 49 sen on Bursa Malaysia.
At 9.10am, the stock was trading at 39 sen after 71.6 million shares changed hands. Meanwhile, the country’s benchmark FBM KLCI was down 0.01%.
Managing Director of Farm Price, Dr. Tiong Lee Chian said, “We are truly grateful for the confidence shown by the market, as we embark on this new chapter of growth as a publicly listed company. This milestone underscores our 20 years of expertise in navigating the complexities of wholesale distribution of fresh vegetable business, from managing a global supplier network to streamlined procurement, inventory management, and logistics planning. Our efforts have paid off, and now, armed with fresh capital, we stand poised for further expansion.”
The Group plans to expand its Senai Centralised Distribution Centre with an additional built-up area of approximately 84,790 sq. ft., notably increasing cold room capacity from 29,669 pallets to around 40,000 pallets annually upon completion. It is also expanding its value-added processing areas to capitalise on the growing demand for its prepacked and fresh-cut vegetables, which boast higher margins. With the additional space, Farm Price will be investing in new machinery and equipment to cater for the anticipated increase in customers’ orders and also to reduce the use of labour as well as expanding its transportation fleet to cater for business expansion and growth.
“To expand our footprint into the central region of Peninsular Malaysia, we are setting up additional regional distribution centres in Nilai, Negeri Sembilan and Cameron Highlands, Pahang. Furthermore, we are establishing a sales and marketing office in Singapore to tap into the rising demand for our fresh produce in the region. Notably, Singapore’s market contribution, already accounting for a quarter of our Group’s total revenue in FYE2023 and boasting higher profit margins, positions it as a strategic focus for future expansion.”
“Farm Price recognises the significant growth potential within the fresh vegetable industry, where our market share remains under 1.0% in both Malaysia and Singapore. To capitalise on the rising demand for fresh produce, we are committed to ensuring seamless service throughout our Senai Centralised Distribution Centre’s expansion,” Dr. Lawrence concluded.
To recap, Farm Price has raised a total of RM24.5 million from the IPO. Of this sum, RM6.40 million (26.14%) is directed towards the construction of additional operational and related facilities at the Senai Centralised Distribution Centre, while RM2.0 million (8.17%) is earmarked for the purchase of machinery, equipment and logistics fleet. Additionally, RM1.6 million (6.54%) has been allocated for planned regional distribution and procurement centres. Meanwhile, RM10.58 million (43.22%) is dedicated to working capital, with the remaining RM3.90 million (15.93%) to cover listing expenses.
Earlier, Farm Price garnered significant interest from investors for its initial public offering (IPO), which has been oversubscribed by 91.35 times ahead of its listing on the ACE Market of Bursa Malaysia Securities Berhad (Bursa Securities).
Farm Price, a Johor-based wholesaler and distributor of fresh vegetables, food and beverage (F&B) products and other groceries, through its subsidiaries is principally involved in the wholesale and distribution of fresh vegetables, F&B products and other groceries serving primarily the Malaysia and Singapore markets.
The wholesale distribution segment contributed RM27.99 million or 91.14% of the total revenue, while the retailing segment contributed RM2.72 million or 8.86% of the total revenue.
The company registered a PBT and PBT margin of RM3.35 million and 10.90% respectively in the current financial quarter. It also registered a PAT and PAT margin of RM2.66 million and 8.65% respectively in the current financial quarter.
For the first quarter ended 31 March 2024, if the expenses incurred for the Listing of RM0.48 million were excluded, the Group said it would have recorded an adjusted PBT of RM3.82 million and an adjusted PBT margin of 12.44%. Correspondingly, the Group also recorded an adjusted PAT of RM3.02 million and an adjusted PAT margin of 9.82%.
Alliance Islamic Bank Berhad is the Principal Adviser, Sponsor, Sole Underwriter and Placement Agent for the IPO Exercise.
