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39 comment(s). Last comment by zhen wei & JP 2022-03-11 21:39

Posted by EatCoconutCanWin > 2022-03-03 10:16 | Report Abuse

Current pe ratio at 70. Omg super duper high. Only selling milk, nothing else. No good for farm as cow feed price increase, impacted earnings.

Posted by MQTrader Jesse > 2022-03-03 11:27 | Report Abuse

@EatCoconutCanWin PE 70 including the one-off tax payment. The adjusted PE should around 36 times

This values the company at approximately 69 times its FY2021 (ended March 31) profit of RM36.2 million and 36 times its adjusted profit of RM69 million, after taking into consideration factors that include one-off tax liability expenses which are not part of its core earnings.

Source: theedgemarkets


2,534 posts

Posted by gohkimhock > 2022-03-03 11:31 | Report Abuse

every year companies have to pay corporate tax. Do you plan to exclude it off too?


802 posts

Posted by Cipta > 2022-03-03 11:59 | Report Abuse

Good in-deep study MQ. Well done.

I would like to add on a few risk factor:
1) with high gearing, future interest hike may affect the profit.
2) is the expansion plan in the IPO prospect factor in current inflation such as logistic, animal feed, stainless steel etc?
3) F&N has invested in milk cow farm land in Perlis, we can foresee the competition will be intense in next 2-3 years.

BTW, if you gonna publish 3rd report, could you include the PE comparison to peers, discount cash flow method, how PE36 concluded for FARM Fresh?
And the productivity year of milk cow as well as biological asset depreciation .

Again, looking forward to read your analysis. :)


2,534 posts

Posted by gohkimhock > 2022-03-03 12:41 | Report Abuse

the author highlighted the biggest issue here. The capital from this IPO can only last for 2 years. What happen after 2 years? Rights issue? Private placement? The high borrowings is also a big concern. I never liked companies with such debt..


61 posts

Posted by Golf123 > 2022-03-03 12:52 | Report Abuse

Public issue only 10%, control counter.


802 posts

Posted by Cipta > 2022-03-03 12:56 | Report Abuse

hi Goh, Well i would like to see it positively that the company will immediately use the proceeding to build new plant and farm and it takes only 2 years. I hate those management hold the fund raised by depositing in bank for low interest income. From the GP, i see the revenue generated from the new investment are enough and sustainable for working capital therefore the co does not need to raise fund for working capital more than 2 years. Other words, the new plant n farm has positive cash flow.


802 posts

Posted by Cipta > 2022-03-03 13:25 | Report Abuse

@goh yeah, i expect interest will go up in 1 or 2 years if no sudden drop of economy and it will eat into Farm Fresh profit. With the new facility as security, the management can renegotiate the loan interest may be.
From the PE alone, I would pick Dutch Lady from open market instead of locking my fund a few weeks for lucky draw. Moreover, Ductch lady is the no 1 in the fresh milk segment and declare dividend consistency.

I would like to listen MQ how PE36 arrived for Farm Fresh. Shall we?


2,534 posts

Posted by gohkimhock > 2022-03-03 13:38 | Report Abuse

they arrived at PE 36 by not paying any single sen of tax which is very misleading.. The PE will be printed as at least 70 when listing date comes. I want to know how much amount of tax they underestimated in the prior year?


28 posts

Posted by Got_Milk > 2022-03-03 14:22 | Report Abuse

Historical PE 36x is derived from FYE 31 March 2021 adjusted profit of RM69mil derived after adjusting for the the one-off tax expenses of RM25.7mil, all of which is contained in the IPO Prospectus


802 posts

Posted by Cipta > 2022-03-03 14:47 | Report Abuse

PE is Price/EPS no need further explain.

My question is: for instance, Dutch Lady, as per @Goh said is PE=8, why investment bank think it is 4x worth more than Dutch Lady? How they come into conclusion in this valuation?


2,033 posts

Posted by Stockhunter88 > 2022-03-03 14:49 | Report Abuse

All I know is day after IPO sure fly, but whether it will hold for 6 months is another topic to go


248 posts

Posted by Traderjoes > 2022-03-03 14:59 | Report Abuse

will buy if it drops below 1.00


1,976 posts

Posted by VTrade > 2022-03-03 16:13 | Report Abuse

What is main product of farm fresh ?
How farm fresh to take over the market when so many product come out?


174 posts

Posted by shiby > 2022-03-03 19:06 | Report Abuse

will wait and see untill ipo listing. The pricing is a little bit on the high side.

Posted by MQTrader Jesse > 2022-03-04 08:52 | Report Abuse

Hi @gohkimhock, here is the clarify for the Tax expense, there are 2 type of tax expenses which is "Current tax and deferred tax" & "Additional tax for prior years".

The current tax and deferred tax :
FYE 2021: RM 9.05 mil
FYE 2020: RM 1.79 mil
FYE 2019: RM 804k

The additional tax for prior years
FYE 2021: RM 25.70 mil
FYE 2020: -
FYE 2019: -

The additional tax is one off tax, therefore we only exclude the RM 25.70 mil of additional tax for prior year to get the adjusted figure under the margin part.

The one-off liability and penalty amounting to RM25.7 million for the years of assessment (YA) 2014 to 2020 ? which was recognised in FY2021 ? is in respect of non-approved locations for certain milk processing plants located in Larkin. (Source: theedgemarket)

Posted by MQTrader Jesse > 2022-03-04 08:53 | Report Abuse

For the PE36x, according from IPO report

For illustration purposes only, assuming the Additional Tax Liability of RM 25,708,582 and the Larkin Facility Tax Incentive (as defined above) of RM 10,490,033 is allocated to respective financial year/periods, the adjusted consolidated PAT for the financial years/periods indicated would be as follows.

Consolidated PAT: RM 32,828 mil + Reallocation of additional tax liability: RM 25.709 mil +Reallocation of tax reversal: RM 10.490 mil = Adjusted PAT: RM 69.027 mil.

More information on the tax incentive you may refer: Farm Fresh - Prospectus (Part 2) Pg 292


2,534 posts

Posted by gohkimhock > 2022-03-04 09:28 | Report Abuse

@Jesse why tax amount for YA2019 was only 804k? shouldn't it be 24%? In 2021 it was 10 fold..


8 posts

Posted by Kzxd85 > 2022-03-04 11:09 | Report Abuse

@Jesse looking at the comments, seems many casual investors are bearish on the stock, while more savvy investors / institutions are bullish. With institutions taking up nearly 92% of the stock and retail investors taking 8%. How do you think this will effect it and play out?


59 posts

Posted by kktan63 > 2022-03-04 11:20 | Report Abuse

i am more interested in the TP ! Any analyst has worked it out?

Posted by MQTrader Jesse > 2022-03-04 17:43 | Report Abuse

@gohkimhock, these incentives have led to Farm Fresh incurring effective tax rate in Malaysia of 5.1% in FYE 31 March 2019, 5.8% in FYE 31 March 2020 and 8.5% (excluding impact of the tax reversal of RM 10,490,033) in FPE 30 September 2021, respectively which were lower than the Malaysian statutory tax rate of 24.0% for each of FYE 31 March 2019, FYE 31 March 2020 and FPE 30 September 2021.

Farm Fresh voluntarily sought clarification on 5 October 2020 from the MOA on the tax exemption status of the Larkin facility, they were informed that they were in bread of the Expansion Notification Requirement.

For more information regard the LPD you may refer Prospectus part 2 pg 292 & 293


151 posts

Posted by bsinvestor > 2022-03-05 14:58 | Report Abuse

how much normally retailer will get from IPO? 50 lot?


629 posts

Posted by DickyMe3 > 2022-03-05 20:01 | Report Abuse

Beware of get rich quick IPO scheme.
Heavy weights will definitely unload when the price is right upon listing.
Listing date is their opportunity to become multi millionaire without a drop of sweat.
The anchovies better wait and see, don't swim into whale's mouth.
Let the hype settle.


629 posts

Posted by DickyMe3 > 2022-03-05 20:04 | Report Abuse

NET debt growing almost 100% each year.


629 posts

Posted by DickyMe3 > 2022-03-06 16:09 | Report Abuse

In spite of increased milking cows, output of raw milk dropped highlighting inefficient production.


2,372 posts

Posted by meistsk3134 > 2022-03-06 16:27 | Report Abuse

facebook have bursa bomoh condemn this company say milk not fresh and the IPO only base 60%..


2,372 posts

Posted by meistsk3134 > 2022-03-06 16:27 | Report Abuse

anybody can confirm it?


1,704 posts

Posted by ktrader > 2022-03-06 17:27 | Report Abuse

yes, clarification is urgently needed regarding the Bomoh's claim.


424 posts

Posted by DuitGeli2 > 2022-03-06 17:59 | Report Abuse

Looks like there's hidden agenda with the bomoh's claim. He did promote Summerfield milk in one of his post.


945 posts

Posted by kl_guy > 2022-03-06 18:23 | Report Abuse

Buy IPO share when market is hot. Else buy them after 1 year listing.
Better save then sorry .

Posted by EatCoconutCanWin > 2022-03-07 11:57 | Report Abuse

PE 36 is refer to fy2023 lo. PE 70 is 2021. 2022 not sure the report how yet. Dedak or cow feed rise lo 20-30%. I give TP 0.80


2,978 posts

Posted by OKU_2020 > 2022-03-07 21:24 | Report Abuse

TA >> Farm Fresh fair value RM 1.70
Nestle RM 135.90
Dlady RM 32.14


1,704 posts

Posted by ktrader > 2022-03-07 21:32 | Report Abuse

TA >>> RM1.75, Mercury RM1.53


1,976 posts

Posted by VTrade > 2022-03-08 22:53 | Report Abuse

Closing already

See Peer reaction will know is tat ff is will growing or not

Posted by EatCoconutCanWin > 2022-03-09 08:20 | Report Abuse

the CEO said cow milk is not powder. but reality in annual report have powder at 60%.

Posted by PassionateInvestor > 2022-03-09 14:38 | Report Abuse

MQ, many thanks for your analysis.

zhen wei & JP

1,099 posts

Posted by zhen wei & JP > 2022-03-11 21:39 | Report Abuse

Ms Jesse, time to include farm fresh 5306 discussion forum .

Many thanks!

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