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Farm Fresh to raise funds via sukuk

Image by Farm Fresh

The Holstein Milk Co Sdn Bhd (THMC) is said to have proposed a RM1 billion Islamic bond issue under the Sukuk Wakalah programme. The Malaysian Rating Corp Bhd (MARC) has assigned a preliminary rating of AA-IS to the proposed sukuk.

What is interesting about the MARC statement is the revealing of several interesting information about this privately-run entity, which is backed by the Malaysian sovereign wealth fund Khazanah Nasional Bhd.

THMC has a 15.6% domestic market share in milk products and is the second biggest dairy player in Malaysia in January 2021.

THMC has a dominant 36% market share in the premium chilled fresh milk segment as of end-2020. In the shelf-stable milk segment, the company has doubled its market share to 8% in 2020.

The home dealer network contributed 35% of total revenue as of end-2020. The home dealer network has not only lowered the company’s advertising and marketing costs but has also helped micro entrepreneurs to supplement their household income.

THMC has 1,510 acres of farm acreage and 2,555 acres in the Australian state of Victoria. As of end-December 2020, the four Malaysian farms have 5,887 heads of cattle and in Victoria, there are 2,618 heads of cattle.

The company’s milk production rose to 70.6 million litres in FY2021 from 46.2 million litres in FY2020.

Revenue in FY2020 reached RM303.1 million from RM54.9 million in FY2016. For FY2020, UHT milk accounted for 28% of revenue, while the bulk came from chilled fresh milk at 56%.

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