Farm Price ends first day of listing with 71% gain on ACE Market

Sunday 08 Sep 2024

KUALA LUMPUR (May 14): Vegetable wholesaler and distributor Farm Price Holdings Bhd (KL: FPHB) ended its first day of listing with 71% gain on the ACE Market.

Farm Price opened at 48 sen, double its initial public offering (IPO) price of 24 sen. The stock climbed to as high as 49 sen before closing at 41 sen after more than 147 million shares changed hands on Bursa Malaysia.

The first day pop would be the biggest since oil and gas services company Keyfield International Bhd’s [KL: KEYFIELD] 114% gain on April 22 followed by KJTS Group Bhd [KL: KJTS] that climbed 85% when the building support services firm was listed on Jan 26.

Demand from investors was strong during its IPO, with the public tranche oversubscribed by 91.35 times. The Bumiputera portion was oversubscribed by 90.61 times, while the other public category was oversubscribed by 92.08 times.

Shares made available for eligible directors, employees and persons who have contributed to the success of the company were fully subscribed. The shares allocated for selected investors offered through private placement were also fully taken up.

Besides the wholesale and distribution of fresh vegetables, Farm Price also operates a retail store in Ulu Tiram, Johor, selling fresh vegetables, food and beverage products, and other groceries directly to end-consumers.

The company has regional distribution centres across the northern, central and southern regions of Peninsular Malaysia, along with a centralised distribution centre in Johor serving both the Malaysian and Singapore markets.

The sale of new shares raised RM24.48 million, of which 43% was allocated for working capital and 26% for the construction of new facilities.

It also allocated 8% of the proceeds for the purchase of machinery, equipment and logistics fleet, and 7% for a planned regional distribution and procurement centre. The remaining 16% is set aside to cover listing expenses.

The offer-for-sale of existing shares, meanwhile, raised RM7.92 million that would go entirely to its selling shareholders — managing director Dr Tiong Lee Chian and executive director Liew Tsuey Er, who is also Tiong’s wife.

At the IPO price of 24 sen per share, the company would be valued at 12.4 times its net profit of RM8.7 million for the financial year ended Dec 31, 2023 (FY2023), which it made on a revenue of RM114.2 million.

As for the first quarter ended March 31, 2024 (1QFY2024), Farm Price recorded a net profit of RM2.67 million on revenue of RM30.71 million. Its net profit would have been RM3.02 million excluding listing expenses of RM480,000, while its adjusted net margin was 9.82% compared with 8.65% (inclusive of listing costs).

Alliance Islamic Bank Bhd is the principal adviser, sponsor, sole underwriter and placement agent for the IPO exercise.

Edited BySurin Murugiah

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