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Farm Fresh sets IPO price at RM1.35 per share, valued at 36 times of FY21 adjusted profit

KUALA LUMPUR (Feb 28): Dairy producer Farm Fresh Bhd said on Monday (Feb 28) that it is setting its initial public offering (IPO) price at RM1.35 per share and will have a market capitalisation of RM2.5 billion upon listing with an enlarged share capital of 1.86 billion shares. This values the company at approximately 69 times its FY2021 (ended March 31) profit of RM36.2 million and 36 times its adjusted profit of RM69 million after taking into consideration factors that include one off tax liability expenses.

In a Monday press release, Farm Fresh noted that it will raise approximately RM1 billion, in an offer for sale of up to 520.2 million of its share and a public issue of 223 million new shares, based on an initial offering price of RM1.35 per share.

This makes it Malaysia’s largest IPO since June 2021.

The group, which launched its prospectus on Monday, will use the proceeds raised via the public issue to establish a new manufacturing hub, dairy farm and integrated processing facility in Malaysia, the expansion of a production facility in Australia, regional expansion outside Malaysia as well as for working capital together with listing expenses.

Farm Fresh noted that the IPO has secured support from a record number of 30 cornerstone investors, the most seen in a Malaysian IPO to date.

The 30 cornerstone investors 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, JP Morgan Asset Management (Singapore), KAF Investment Funds, Kenanga Investors, Kumpulan Wang Persaraan (Diperbadankan), 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% of the institutional offering tranche under the IPO, Farm Fresh said.

Farm Fresh, which has been in operations since 2009, reported a profit after tax of RM36.2 million in FY2021, which marked a compound annual growth rate (CAGR) of 14.9% compared to its profit after tax of RM27.4 million in FY2019.

For FY2019 to FY2021, the group’s CAGR for revenue was 65.9% from RM178.2 million to RM490.5 million.

Farm Fresh had noted that it is targeting a dividend payout of 25% of annual earnings.

The group is the second-largest player in the ready-to-drink milk category for the first nine months of 2021, commanding an 18% market share of the market, according to Frost and Sullivan.

Farm Fresh also noted that it is the market leader with a market share of 42% for the nine months ended September 2021 in the chilled ready to drink milk segment. The group is also the third largest player in the yogurt category, with an 11% share of the Malaysian market, Farm Fresh added.

Applications for the public issue portion are open from Monday (Feb 28) and will close at 5pm on March 8. The group is scheduled to be listed on the main market of Bursa Malaysia on March 22.


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