RHB Investment Bank Bhd (RHB Research) has initiated coverage on Farm Price Bhd (FPHB) with a BUY call and a target price of RM0.47, implying a potential upside of 20.5% from its last traded price of RM0.39. The house reported that the company’s planned capacity expansion, due for completion in the first quarter of 2026, is expected to unlock strong earnings growth and drive a re-rating of its valuation after years of operating at full utilisation.
The research house noted that the expansion will add 35% capacity to its Senai distribution centre, supported by RM18 million in capital expenditure. With operations currently running at maximum utilisation, RHB Research expects the additional capacity to be absorbed within three years, underpinned by market share gains both in Malaysia and Singapore.
The firm projected Farm Price’s earnings to grow by 33% year-on-year in FY26, with sustained growth driven by its fresh produce distribution network, cold-chain infrastructure and rising demand for value-added services such as pre-packed and fresh-cut vegetables.
RHB Research highlighted that the company stands to benefit from Malaysia’s National Agrofood Policy (NAP) 2.0, which outlines structural initiatives to strengthen food security, modernise the food value chain and enhance regional supply resilience. With a diversified supplier base and a focus on cold-chain logistics, Farm Price is seen as well-positioned to capture policy incentives while benefiting from stable consumer demand and improved regional market access.
Singapore is expected to play a bigger role in Farm Price’s growth strategy, with the group targeting the city-state to contribute 50% of sales in the longer term, up from the current 28%. Its ability to offer structurally lower costs – between 10% and 15% below market rates – and its Johor-based facility, which ensures faster delivery times, give it a competitive advantage in securing new contracts.
RHB Research also pointed to its role as a panel supplier to Compass Group (Singapore), one of the leading institutional foodservice operators, as validation of its reliability and product quality.
Looking ahead, RHB Research forecasts a three-year earnings compound annual growth rate of 14.7%, supported by market share gains and economies of scale from the expanded capacity. Its discounted cash flow valuation, which includes a 2% ESG discount, suggests an implied FY26 price-to-earnings multiple of 15.7 times.
While margins may still be partly exposed to fluctuations in fresh produce prices, the analysts said Farm Price’s staple product portfolio and increasing contribution from value-added services provide resilience in earnings.
As of 10.52 am, the stock price rises 3.9% to RM0.400.
