KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) is expected to deliver a stronger performance in the financial year ending Sept 30, 2026 (FY26), supported by higher sales, lower costs and narrowing losses from its dairy business.
CIMB Securities Sdn Bhd remains positive on the outlook for food and beverage manufacturers following the group’s FY25 results briefing, citing a likely rebound in domestic and export demand alongside more stable input prices.
The firm kept its “Buy” call on the stock with an unchanged target price of RM32, based on 21 times 2027 forecast price-to-earnings (P/E) ratio.
F&N’s revenue for FY25 was broadly flat, dipping 0.9 per cent year-on-year, due to multiple global and regional disruptions — including US-China trade tensions, the Thailand–Cambodia border conflict, and political unrest in Myanmar.
Sales in Malaysia rose slightly by 0.4 per cent, but this was offset by a 2.6 per cent decline in its Indochina operations.
For FY26, the company anticipates a recovery in sales volumes, supported by new product launches designed to meet consumers’ growing demand for healthier and flavourful options.
It also expects exports to Cambodia to rebound following the reopening of borders, while intensified marketing campaigns are planned to strengthen brand visibility and stimulate demand.
F&N also expects input costs to stay favourable, helping to maintain margins that improved by one percentage point in FY25 at the earnings before interest, taxes, depreciation and amortisation level.
CIMB Securities said the company reported RM20 million in start-up losses from its new integrated dairy farm in FY25, but these are expected to narrow from the third quarter of FY26 as operations scale up.
The farm now houses over 4,400 cattle, including 2,000 lactating cows producing an average of 28 litres of milk per cow per day. Phase 1 of the RM2 billion project is fully operational, with 90 per cent of the budget utilised.
“We also anticipate lower gestation costs from its new dairy farm from Q3 FY26 onwards, driven by greater operating scale and a larger herd size,” the firm said.
CIMB Securities said noted that F&N’s valuation remains attractive, trading at 19.7 times 2026 forecast P/E, a steep 45 per cent discount to the consumer staples sector average of 36 times.
“While near-term earnings growth is modest — with a three-year compound annual growth rate of 3.3 per cent — earnings have bottomed.
“Continued recovery in export and domestic sales and lower start-up losses should support earnings recovery ahead,” the firm added.
© New Straits Times Press (M) Bhd
