PETALING JAYA: Dairy producer Farm Fresh Bhd, which aims to raise around RM1bil from its listing on Bursa Malaysia, is targeting to export its products to Hong Kong by the end of this year in view of the shortage of milk in the city.

       Farm Fresh group managing director and group chief executive officer Loi Tuan Ee disclosed that Hong Kong was unable to get sufficient milk supplies from China leading to shortages in the city.

       “This is a good opportunity to move into the Hong Kong market as they don’t have dairy farms and no local production. A lot of their milk products are imported, similar to Singapore,” he told reporters after the group’s prospectus launch yesterday.

       The group also plans to venture into other new markets, namely, Indonesia and the Philippines, while expanding its presence in Singapore through advertising and promotion activities.

       Loi added that the group is also looking to go downstream and may produce its finished products in Australia.

       “We will probably use Australia as a base to export finished goods rather than from Malaysia,” he said.

       Its local operations, meanwhile, may undergo plant rationalisation plans with its new plant in Taiping coming on stream by the end of the year.

       The new plant in Taiping would be supplying fresh milk products to northern Malaysia. Currently, the group’s products for northern Malaysia are being supplied by both its plants in Johor and Pahang.

       As soon as the Taiping plant is operational, Loi explained that the freed capacity in the Johor plant will be exported to Singapore.

       With the backing of Khazanah Nasional Bhd, the company now operates five dairy farms in Malaysia and a dairy farm in Australia, spanning across 5,400 acres with a total herd size of around 9,960 dairy cows and bulls.

       Farm Fresh, which is set to be Malaysia’s largest initial public offering (IPO) since June last year, is expected to make its debut on Bursa Malaysia on March 22.

       Its IPO involves an offer for sale of up to 520.2 million existing shares and a public issue of 223 million new shares based on the initial retail price of RM1.35 per share.

       Of the RM1bil proceeds raised, around RM301mil would be used to form a new manufacturing hub, dairy farm and integrated processing facility in Malaysia, for the expansion of a production facility in Australia, for regional expansion and for working capital together with listing expenses.

       It is worthy to note that Farm Fresh’s IPO has gained support from a record number of 30 cornerstone local and foreign investors. The cornerstone investors will take up approximately 80% of the institutional offering.

       The group is eyeing a market capitalisation of RM2.5bil, with an enlarged share capital of 1.86 million shares upon listing.

       From financial year ended March 31, 2019 (FY19) to FY21, Farm Fresh’s revenue grew at a compounded annual growth rate (CAGR) of 65.9% to RM490.5mil from RM178.2mil.

       It reported a profit after tax of RM36.2mil in FY21, which marked a CAGR of 14.9% compared to its profit after tax of RM27.4mil in FY19.

       Farm Fresh said that it is targeting a dividend payout of 25% of annual earnings.

       According to Frost & Sullivan, Farm Fresh is the second-largest player in the ready-to-drink milk category for the first nine months of 2021, commanding a 18% market share.