Friday, September 29

Farm Fresh eyes RM1 bln proceeds, RM2.5 bln market cap on listing


Loi (middle) accompanied by (from left) Maybank Investment Bank chief executive officer Datuk Fad’l Mohamed, Farm Fresh independent non-executive chairman Tan Sri Megat Najmuddin, CIMB Investment Bank chief executive officer Jefferi Hashim and Credit Suisse Securities director and co-heaf of Malaysia investment banking and capital markets Lee Han Ping during the prospectus launch today.

KUALA LUMPUR: Malaysian dairy company Farm Fresh Bhd is eyeing proceeds of RM1 billion and a market capitalisation of RM2.5 billion upon its listing on Bursa Malaysia’s Main Market based on its initial retail price of RM1.35 per share.

Proceeds to the company of about RM301.0 million will be utilised to establish a new manufacturing hub, dairy farm and integrated processing facility in Malaysia, expansion of a production facility in Australia, regional expansion outside Malaysia and for working capital together with listing expenses.

The initial public offering, en route for listing on March 22, has secured support from a record number of 30 cornerstone investors, Farm Fresh said in a statement issued in conjunction with its prospectus launch today.

They are Abrdn, Affin Hwang Asset Management, AIA, Alcea Rosea (Creador), Barings Singapore, Eastsprings Investments, Employees Provident Fund, Fortress Capital Asset Management, Franklin Templeton Asset Management (Malaysia), Great Eastern Life Assurance (Malaysia), Hong Leong Asset Management, Hong Leong Assurance, JPMorgan Asset Management (Singapore), KAF Investment Funds, Kenanga Investors, Retirement Fund (Incorporated), Lembaga Tabung Haji, Manulife Investment Management, Maybank Asset Management, Merit Glory (Ikhlas Capital), New Silk Road Investment, OAKS Emerging Umbrella Fund, Permodalan Nasional Bhd, Principal Asset Management, Social Security Organisation, UBS Asset Management (Singapore), UOB Asset Management (Malaysia), Urusharta Jamaah, Value Partners Hong Kong and Zurich Life Insurance Malaysia.

The cornerstone investors will take up approximately 80 per cent of the institutional offering tranche under the IPO.

Its enlarged share capital will hit 1.86 billion shares on listing.

Group managing director and group chief executive officer Loi Tuan Ee said that post listing, the largest player in the ready-to-drink milk will execute plans to grow its market share and sales domestically and internationally.

‘’By optimising our growth, we endeavour to reward our shareholders through the adopted dividend policy that targets to return 25 per cent of our annual earnings to shareholders,’’ he said.

Loi said Farm Fresh is well positioned to capitalise on the sustained strong consumer demand for fresh milk products in addition to addressing the insufficient local milk production.

Farm Fresh, he said, is planning to venture into new markets like the Philippines and Indonesia, while strengthening the Hong Kong footprint via exports of more products.

“What we are planning in these countries is basically to have a processing plant to begin with and then build our brand, in particular, the fresh category,’’ he said during a press conference.

He said the main ingredients will still come from Australia.

Currently, rising costs of animal feed such as corn and soybean as well as fuel are manageable.
‘’We hope the supply chain will improve, hopefully by the end of the year and prices of commodities will soften,’’ he added.

Loi said Farm Fresh is also looking to go downstream and produce finished products outside Australia.
Domestically, it is mulling plant rationalisation, with its Taiping, Perak plant estimated to be operational by year-end and will be supplying fresh milk products for the market in northern Malaysia.

Currently, all products for the northern market are being supplied by the Muadzam Shah, Pahang and Johor plants.

He said once the Taiping plant is up and running, the freed capacity in the Johor plant will be exported to Singapore.

With the support from Khazanah Nasional Bhd, the company now operates five dairy farms in Malaysia and a dairy farm in Australia, across approximately 2,185 hectares, with a total herd size of around 9,960 dairy cows and bulls.

From financial year ended March 31, 2019 to March 31, 2021, the group’s compound annual growth rate (CAGR) for revenue was 65.9 per cent from RM178.2 million to RM490.5 million. – Bernama