May 14, 2024 - Shares of Farm Price Holdings Bhd ($FPHB (0304.MY)$) surged 70% in its trading debut on Tuesday after the fresh vegetable wholesaler and distributor’s initial public offering (IPO) on the ACE Market raised RM24.48 million.
Farm Price, a company specializing in the wholesale and distribution of fresh vegetables, made a strong debut on Bursa Malaysia with its shares opening at twice their initial public offering (IPO) price of 24 sen, hitting a high of 49 sen, As of press time, the stock price reached 41 sen, with a trading volume of 1.41 billion shares. The robust investor interest was evident as the IPO was massively oversubscribed, with the public tranche receiving 91.35 times more applications than available, the Bumiputera portion 90.61 times, and the other public category 92.08 times.
The company's employee and director share scheme, in addition to a private placement for selected investors, were both fully subscribed. Farm Price operates not only in distribution but also in retail, with a store in Ulu Tiram, Johor. It boasts a network of regional distribution centers throughout Peninsular Malaysia, including a central hub in Johor that caters to both Malaysian and Singaporean markets.
The IPO raised RM24.48 million, earmarking 43% for working capital and 26% for new facility construction. Additionally, 8% was allocated for machinery, equipment, and fleet expansion, with another 7% for a new regional distribution and procurement center. Listing expenses accounted for the remaining 16% of the funds.
The offer-for-sale component of the IPO resulted in RM7.92 million for the selling shareholders, the managing director Dr. Tiong Lee Chian and his wife, executive director Liew Tsuey Er. Following its IPO, Farm Price was valued at 12.4 times its FY2023 net profit of RM8.7 million, which was earned from a revenue of RM114.2 million.
For 1QFY2024, Farm Price reported a net profit of RM2.67 million from a revenue of RM30.71 million. Without the listing expenses of RM480,000, the profit would have been RM3.02 million, with an adjusted net margin of 9.82%, higher than the 8.65% margin including listing costs.
Alliance Islamic Bank Bhd played a pivotal role in the IPO, acting as the principal adviser, sponsor, sole underwriter, and placement agent.