KUALA LUMPUR (Dec 5): Shares of Cropmate Bhd (KL:CRPMATE) ended its first day of listing on the ACE Market with a 5% gain, after its initial public offering (IPO) raised some RM42 million for the fertiliser company to fund its operations and expansion.
The counter, which opened at 24.5 sen — up 22.5% or 4.5 sen from its IPO price of 20 sen — closed at 21 sen with a market capitalisation of RM155 million.
It was the most actively traded stock on Bursa Malaysia on Thursday, with 216.79 million shares done.
Cropmate is mainly involved in the formulation and blending of conventional and specialty fertilisers, as well as trading of straight fertilisers based in Selangor. The company currently has four blending-compacting production lines, with an annual capacity of up to 214,000 tonnes of fertilisers.
Cropmate eyes growth on rising durian demand, fertiliser price recovery
Cropmate is optimistic about its prospects with China’s growing appetite for durian, coupled with an anticipated rebound in average selling prices (ASPs) of fertilisers.
Citing a research report from HSBC, China's appetite for durian has increased global demand by 400%, according to Cropmate sales and technical director Leong Fo Seong. He sees this as a key growth driver for the group’s specialty fertiliser business, which caters to local durian orchards.
“The increase in demand from China is a growth driver for Malaysia’s [planters], because we are the major Musang King durian exporter. And Cropmate is in Malaysia, and our specialty fertiliser is designed to increase fruits’ aroma, texture as well as the quality,” Leong said during the press conference after the listing ceremony.
Leong also pointed to an expected rebound in ASPs of fertilisers as early as the first quarter of 2025 as another growth factor next year.
According to Leong, current ASPs have normalised and bottomed out at around RM1,400 per metric ton (MT), from the level of RM1,160 per MT in 2021, and thus, he anticipates a rebound in the first quarter of next year.
Fertiliser prices had peaked at RM3,850 per MT in 2022, spurred by supply disruptions from the Russia-Ukraine war.
Cropmate recorded a profit after tax (PAT) of RM10.05 million for the financial year ended Dec 31, 2023 (FY2023), dropping 31.2% year-on-year from RM14.62 million in FY2022. In FY2021, it recorded a PAT of RM7.63 million.
Revenue for FY2023 was RM151.55 million, decreasing 19.5% from RM188.3 million in FY2022. Revenue stood at RM108.78 million in FY2021.
For the five months ended May 31, 2024, net profit was RM5.58 million on the back of a revenue of RM67.3 million, the company's prospectus showed.
The offer price of 20 sen valued the group at about 14 times FY2023 earnings.
The sale of new shares from the IPO raised RM42 million, of which RM17.1 million will be allocated for working capital to support the company's operations in providing fertilisers for durian orchards and oil palm plantations.
Cropmate will also set aside RM16.7 million to partly finance the purchase considerations for factories where the company’s operations are located. The remaining funds are earmarked for capital expenditure, including the setting up of a research laboratory, and to defray listing expenses.
The IPO also had an offer for sale, grossing RM10 million, which would accrue entirely to the selling shareholders — managing director Lee Chin Yok and his sons Lee Cheng Seng and Lee Cheng Fei, who are both executive directors, as well as to substantial shareholders Lau Sam Siong and Datuk Tan Chew Chin.