Farm Fresh’s shares close at premium on strong debut

by AUFA MARDHIAH / pic by TMR FILE

FARM Fresh Bhd made a strong debut on the Main Market yesterday, closing at a premium of 37 sen or 27% to its offer price of RM1.35 a share.

The stock hit a high of RM1.86 and low of RM1.70 in intraday trade as the stock became the most actively traded security on the exchange with some 330 million shares trading hands.

Read more: Farm Fresh rallies on Bursa debut

“There was strong demand for its shares from investors, both institutional and retail, prior to listing which could explain the high premium over its offer price,” said a dealer with a local brokerage.

Farm Fresh is the largest listing on Bursa Securities since June 2021 and yesterday’s closing price gives the dairy concern a market valuation of RM3.2 billion.

The company raised RM301 million from the listing exercise of which RM140 million is intended for the establishment of a new manufacturing hub, a new dairy farm and an integrated facility in Malaysia, while RM60 million has been earmarked for the expansion of its production facility in Australia, RM40 million for regional expansion and RM40.8 million for working capital.

Farm Fresh group MD and CEO Loi Tuan Ee said the listing is a great milestone in its journey towards becoming a regional player in the fast-moving consumer goods space.

“We intend to venture into new regions and markets to extend our presence. With the growing consumer demand for fresh milk products, I am confident that Farm Fresh will deliver quality products and value to consumers,” he after the company’s listing yesterday.

CIMB Investment Bank Bhd is the sole principal advisor for Farm Fresh’s listing exercise.

Credit Suisse Securities (M) Sdn Bhd and Credit Suisse (Singapore) Ltd participated as the joint global coordinators and joint bookrunners for the listing of Farm Fresh.

Affin Hwang Investment Bank Bhd, AmInvestment Bank Bhd, Hong Leong Investment Bank Bhd and RHB Investment Bank Bhd are the joint underwriters for the IPO.

Farm Fresh group CFO Mohd Khairul Mat Hassan said the company is set to launch its latest grow up milk as well as its full premium powder milk — Yara.

“We are looking forward to our regional expansion to the Singapore market from our Larkin facility. Once we have our Taiping plant up and running, we will be able to free up capacity at our Larkin plant to cater further to the Singapore market,” he added.

Farm Fresh plans to tap the Hong Kong market by the end of this year by setting up a company there.

“Indonesia is also another market significant to us — we have started work about a year and a half ago to get the halal certification and obtain the Indonesian Food and Drug Administration approval for four of our products and planned to export there soon. The Philippines is also another market we have ambitions to go into,” he added.

In terms of the price hike in raw materials, Loi said the supply chain disruption has indeed caused strong headwinds which requires the company to monitor closely.

“Farm Fresh has built up a great brand with very strong affinity with Malaysian customers — we have not increased our price for years because we wanted to make fresh milk a lot more affordable for all and be able to reach out to more people to enjoy our Farm Fresh milk,” he explained.

Over the past 15 months, some of Farm Fresh’s competitors have raised prices two to three times, he added. Farm Fresh, after four years, decided to raise its milk prices last September to mitigate the higher cost factors, he said.

Farm Fresh is looking into producing plant-based milk driven by strong demand in the US, Europe and Australia.

In Malaysia it is also slowly getting recognition. Farm Fresh also offers niche segments like soy milk, almond milk and oat milk.

“In the coming years should the trend continue to uptrend, we have a series of products to pick up this opportunity. The plant-based dairy generally gives us a higher margin. We are also rolling out our barista version meant for cafe use next month.

“We also positioned ourselves whereby should the segment grow, we are ready and the only local company with this product in a UHT format,” he said.