Agricore enhancing inventory levels to expand customer base

From left: Agricore independent director Koay Hooi Lynn, chairman Fu Yew Sun, managing director Oon Boon Khong, deputy chairman Datuk Keh Chuan Seng, M&A Equity Holdings Bhd Datuk Bill Tan, independent director Teh Boon Beng and independent director Lee Seow Ling.

KUALA LUMPUR: Agricore CS Holdings Bhd, which debuted on the ACE Market with a 58% premium on its initial public offering (IPO) price, plans to expand its customer base and revenue streams by enhancing its inventory levels.

Utilising its IPO proceeds of RM25.9mil, the company also plans to enhance its storage capacity by 30% and double its sales workforce to support its expansion plans.

A bulk of the IPO proceeds, about 74% or RM18.9mil, will be dedicated to boosting its inventory levels.

Agricore shares opened at 79 sen, a 58% increase from its IPO price of 50 sen, and closed at 87.5 sen yesterday.

Operating under the slogan “You Are What You Eat”, Agricore is a food ingredient supplier that specialises in starch products, beans and pulses.

Managing director Oon Boon Khong said almost three-quarter of the IPO proceeds is earmarked for inventory, which he emphasised as crucial for meeting customer demands promptly and ensuring business growth.

“We are not in a business with high capital expenditure intensity. The most critical aspect for us is maintaining a high stock level to meet our customers’ demands immediately,” he told a press conference in conjunction with the company’s listing ceremony.

To further enhance Agricore’s operational capacity, RM2.7mil or 10% of the proceeds will be invested in a new regional warehouse in Klang.

Oon said the increased inventory will fill both its existing premises in Bukit Minyak, Penang, and the new regional storage facility in Klang, Selangor.

“The new facility, expected to be completed by October this year, will increase our storage capacity between 30% and 40%, allowing us to handle an additional 70 containers on top of our current 180 containers,” he said.

He said increasing its workforce is essential to handle the expected surge in operation, and in a bid to strengthen its market presence, Agricore is also looking to double its sales team.

“We need to enhance our sales force not only to maintain and boost our domestic sales but also to penetrate overseas markets.

“Our participation in overseas exhibitions, particularly in China, the Middle East and Vietnam, is part of our strategy to expand our international customer base,” Oon added.

While 98% of Agricore’s business is in Malaysia, the company also has a presence in Singapore, China, Indonesia, Australia and Hong Kong.

Looking ahead, Agricore will also pay more focus on its food additives segment that is showing significant growth and offers higher profit margins.

The food additives segment generated RM12mil in revenue in 2023 compared with RM8mil in 2022.

“This area is still in its early stage but with our in-house research and development, we plan to increase our offerings and commercialise three to five new stock-keeping units annually,” Oon said.