‘Kind of convincing, how do you think?’
Malaysian Rating Corp Bhd (MARC) affirmed an AA-IS rating on Farm Fresh's RM1 billion Islamic medium-term notes (IMTN) program under the Shariah principles of Wakalah Bi Al-Istihmar with a stable outlook.
According to a statement from the agency, the rating was given after looking at the prospects of Farm Fresh's integrated dairy operations, improved sales performance record and strong domestic market position in the dairy segment as well as strong financial flows.
For information, Farm Fresh has the highest number of dairy cows and the largest production capacity of fresh milk in the country, besides also having a factory in Kyabram Australia.
Currently, Farm Fresh operates 5 farms in Malaysia, covering an area of 2,829 acres with 5,961 dairy cows, as of January 2022.
It also has a farm in Greter Shepparton, Australia that produces 5,416 acres with 5,633 dairy cows.
During the 6 -month period ended September 30, 2021 (1HFY22), Farm Fresh produced 37.6 million liters of raw milk representing 7% of the company’s growth.
Apart from that production, Farm Fresh also obtains a large amount of raw milk through purchases from third party farmers from Australia.
Meanwhile, MARC also stated that Farm Fresh remained the leader in the domestic cold drink (RTD) segment with a market share of 42% at the end of September 2021, besides being listed among the top 3 in the RTD and yogurt segment.
The rating agency added that Farm Fresh is in the best position to capitalize on the growth of fresh milk consumers in Malaysia with a 4.8% year -on -year increase in 2021.
During 1HFY22, Farm Fresh was seen generating revenue of RM257.2 million with an operating profit of RM40.5 million and despite increased production costs, operating profit margin remained stable at 15.7% towards the end of the period.
It is common knowledge that Farm Fresh will be listed on Bursa Malaysia by March 22.
Apart from that, Farm Fresh also offered a relatively high initial public offering (IPO) price of RM1.35 to generate a capital of RM1 billion, and Khazanah is seen supporting the IPO.
