Farm Price Holdings Berhad (FPHB) demonstrated solid financial performance in its recent quarterly earnings, posting revenue of RM30.71 million and a gross profit of RM7.05 million. This translates to a gross profit margin of 22.59%. The company’s Profit Before Tax (PBT) stood at RM3.35 million, with a Profit After Tax (PAT) of RM2.67 million, yielding PBT and PAT margins of 10.90% and 8.69% respectively.

Adjusting for one-off listing expenses of RM0.48 million, the adjusted PBT and PAT improved to RM3.82 million and RM3.02 million, enhancing the PBT and PAT margins to 12.44% and 9.82%, respectively. The effective management of operations is further reflected in the net cash from operating activities amounting to RM3.23 million, closely aligning with 96.50% of the PBT.

Projecting these results forward, FPHB’s forecasted full-year revenue for FY24 is estimated at RM122.84 million, with a projected adjusted PBT of RM15.28 million and PAT of RM12.08 million. This represents year-over-year growth of 7.25% in revenue, 29.71% in PBT, and 38.85% in PAT, signalling strong operational efficiency and profitability.

The company’s strategic focus on higher-margin segments like pre-packaged and fresh-cut vegetables, enhanced by its sophisticated cold-chain facilities, is expected to sustain margin enhancements. Additionally, operational capacity is set to double with increased production shifts prior to the expansion of the Senai facility coming online.

There are talks that the company is also in discussion with well known food operators in Singapore to supply vegetables, which could contribute positively with margin enhancement added with encouraging SGD/MYR.

FPHB’s niche position as a key player in the agricultural sector aligns it closely with the food security theme, which is increasingly relevant on Bursa Malaysia. Given its promising growth trajectory and strategic market positioning, we assign a forward Price-to-Earnings ratio (PE) of 18x to FY24 forecasts, suggesting a target price (TP) of 48.5 cents. This valuation not only reflects the company’s current performance but also its potential for sustained growth in the near future.