KUALA LUMPUR (Nov 14): ACE Market-listed Farm Price Holdings Bhd (KL:FPHB), a Johor-based wholesaler and distributor of fresh vegetables, food and beverage (F&B) products, is expanding its distribution reach to Sabah.

It is taking up a 55% stake in Kota Kinabalu-based Fresh Story Sdn Bhd, which is involved in the export and import of fresh and preserved vegetables and fruits, and the wholesale and retail of vegetables and fruits and related goods, according to Farm Price's bourse filing on Thursday.

It has signed a subscription and shareholders agreement with Fresh Story's current owners Thian Chu Chin and Jong Nyuk Sheng, under which Farm Price will take up 1.1 million shares representing the 55% stake in Fresh Story at the price of RM1 apiece or a total of RM1.1 million. Thian and Jong will each also subscribe for 450,000 new shares each in Fresh Story at the same price.

Thian and Jong, who currently hold a 20% and 80% stake respectively in Fresh story, will end up holding 22.5% stake each in the company, whose share capital will expand from the present RM50,000 to RM2 million on completion of the share subscriptions.

According to Farm Price, Thian and Jong are renowned retailers and wholesalers of local vegetables and fruits serving the Sabah and Sarawak markets. "Farm Price will leverage their distribution network to supply fresh vegetables and other groceries and related products to Fresh Story. Fresh Story will then distribute these products statewide, capitalising on the extensive knowledge and expertise of Thian and Jong to penetrate the entire Sabah market," it added.

In a statement on Thursday, Farm Price managing director Dr Tiong Lee Chian said, “As we extend our reach to Sabah, we are completing our puzzle of geographic expansion across Sabah and Sarawak, where we are already distributing in Sarawak. This move strengthens Farm Price’s national foothold and enables us to leverage Thian and Jong’s understanding of the local market to enhance our distribution capabilities in the region. We look forward to the initiative contributing positively to the group's earnings from 2025.”

“More importantly, with Fresh Story’s wholesale and retail of fruits, we are broadening our offerings beyond fresh vegetables into fruits. We recognise the significant growth potential in the Sabah fresh produce market, driven by state government initiatives aimed at enhancing yields and crop quality to ensure adequate food supply for the state. As such, this partnership presents opportunities for future growth while also contributes to the development of the region's vegetables and fruits industry and promoting food sufficiency,” he added.

On a related note, Farm Price said its new regional distribution centres, equipped with cold room facilities in Cameron Highlands, Pahang, and Nilai, Negeri Sembilan, are on track to commence operations in the fourth quarter of 2024. These expansions will further strengthen the group’s presence and ensure timely and efficient distribution of fresh produce.

The share subscription by Farm Price is expected to be funded through the group’s internal funds. Barring unforeseen circumstances, the subscription is expected to be completed by the fourth quarter of 2024.

Farm Price closed up 1.5 sen or 2.8% at 55 sen on Thursday, giving it a market capitalisation of RM247.5 million. The stock has risen 34.15% year to date.