This article first appeared in Capital, The Edge Malaysia Weekly on November 10, 2025 - November 16, 2025

BURSA Malaysia will soon add another name to its poultry sector listings with the debut of Farmiera Bhd on the ACE Market on Wednesday (Nov 12). The company, which began operations in 2013, will become the 10th poultry-related counter on the exchange, joining established players such as CAB Cakaran Corp Bhd (KL:CAB), PWF Corp Bhd (KL:PWF) and Leong Hup International Bhd (KL:LHI).

Farmiera’s initial public offering (IPO), which aims to raise RM29.25 million through the public issue of 117 million new shares at 25 sen per share, will give the company a market capitalisation of RM112.5 million upon listing. This translates into a price-­earnings ratio (PER) of 16.07 times — a valuation that some investors may find steep, given that most listed peers currently trade at single digit PERs.

Managing director Simon Hong How Seng defends the premium, arguing that Farmiera’s positioning and growth trajectory set it apart.

“Our strategy to go upstream will be margin-accretive, and we are younger and still in the expansion phase, which gives us growth potential,” he tells The Edge in an interview.

Farmiera plans to allocate RM22.15 million or 76% of the IPO proceeds to develop two parent-stock (PS) farms and a hatchery, which will eventually supply about 40% of its poultry farming requirements.

The group differentiates itself from other poultry players by focusing on broiler farming and processing. On a weekly basis, the group sources day-old chicks (DOCs) from nine local PS farms and raises them into full-grown broilers. It currently manages 15 self-operated farms in Selangor and Negri Sembilan, and works with 44 contract farmers across Peninsular Malaysia. Its hybrid model, Hong says, provides both “control over production standards and flexibility in the supply base”.

Upon maturity, the broilers are either channelled to Farmiera’s two processing facilities for slaughtering and packaging or sold live to distributors and wet-market traders. Currently, about 60% to 70% of production is directed to its own processing plants, with the remainder sold externally.

The company adopts an “all-in, all-out” production system within a closed-house environment, raising broilers in batches to reduce the risk of disease outbreaks. After each harvest, facilities undergo thorough cleaning and disinfection before being left vacant for one to three weeks.

Farmiera has also cultivated long-standing supplier relationships, with several partners supporting the business for more than six years. This stable procurement network underpins its ability to meet daily operational demands without incurring significant capital expenditure.

On the customer front, Farmiera has secured prominent retail clients such as Segi Fresh (since 2018) and Hero Hypermarket (since 2020). These two retailers collectively contributed 22.5% to revenue in the financial year ended Dec 31, 2024 (FY2024). More importantly, revenue concentration has eased: the top five customers accounted for 36.1% of revenue in FY2024, down from 43.2% in FY2021, reflecting a more balanced profile.

Farmiera has delivered strong top-line growth in recent years. Revenue rose from RM262.0 million in FY2021 to RM561.1 million in FY2024, representing a three-year compound annual growth rate (CAGR) of 28.9%. Net profit grew even faster, at a CAGR of 63.6%, reaching RM7.0 million in FY2024.

Despite this growth, Farmiera’s profit margin remains thin. Its FY2024 net profit margin of 1.2% lags behind peers: CAB Cakaran (4.1%), PWF Corp (5.6%) and Leong Hup International (6.8%).

Hong acknowledges the challenge, but stresses that Farmiera’s expansion strategy will improve profitability. “We are doing this vertical expansion to produce our own DOCs, giving us greater control over supply, quality and cost management,” he says.

A key plank of Farmiera’s growth plan is its upstream expansion into PS farming and hatchery operations. The group is building three PS farms and one hatchery facility.

Two farms (PS1 and PS3) have been completed and are operational, while PS2 is pending regulatory approvals and scheduled for completion by the second quarter of 2026. Once fully commissioned, the three farms will house 40,000 breeder hens across 12 breeder houses, with an annual capacity of 10.5 million DOCs.

The hatchery, to be located in Mahsan, Negri Sembilan, will have 12 incubators and a built-up of 36,000 sq ft. It will have an annual capacity of 22.6 million eggs, supporting output from the PS farms while allowing for future expansion. Construction is expected to cost RM9.6 million, fully funded by IPO proceeds, with completion targeted for the first quarter of 2027.

Hong emphasises the importance of this vertical integration. “By securing upstream control, we will strengthen our ability to manage input costs and reduce reliance on external suppliers,” he says.

Feed costs remain one of the biggest risks for poultry producers. Farmiera sources feed from local suppliers and uses hedging to manage commodity price fluctuations.

Hong notes that the removal of government subsidies for poultry in November 2023 has reshaped the industry. “We are okay with this open-market system. Only through competition can we see the savings and efficiency in farm operations, which is already reflected in our improved margins in FY2024,” he says.

The group is also investing in technology and automation, including climate-control systems and real-time performance monitoring, to improve productivity and cost competitiveness.

Farmiera has yet to formalise a dividend policy, with management prioritising reinvestment. IPO proceeds will be channelled primarily towards capital expenditure and working capital to enhance operational efficiency and strengthen margins.

In an Oct 27 report, TA Securities projects Farmiera’s net profit to grow by 33.3% in FY2025, 56.7% in FY2026 and 20.2% in FY2027, supported by rising domestic demand for affordable protein and the company’s upstream expansion. However, the research house has set a target price of 20 sen per share — 20% below the IPO price of 25 sen — based on a CY2026 PER of six times.

“This valuation represents a two times discount to our target PER for larger peers. We view the discount as justifiable, given Farmiera’s smaller operational scale and market capitalisation relative to established players that enjoy stronger margins and market positioning,” says TA Securities. 

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