PETALING JAYA: Farm Fresh Bhd
appears to be one of the few consumer companies that provides investors a multi-year growth story with sustainable earnings growth.
Affin Hwang Investment Bank maintained its “buy” call on the stock with a higher target price of RM3.40 a share. This is based on a higher target price-to-earnings ratio (PER) of 38 times from 35 times applied to its revised 2026 earnings per share of 8.9 sen.
It also revised its earnings forecast slightly up by 3% to 6% in financial year 2026 (FY26) to FY28 to reflect lower whole milk powder (WMP) prices. The street earnings forecasts have only been revised up by around 4% to 10% for FY26-FY28 since August 2025.
It said Farm Fresh has been one of the best-performing stocks in the consumer sector with its share price rising 52% in 2025, driven by a combination of earnings upgrades and PER multiple expansion, it added.
The catalyst was largely the investors cheering its Cambodian expansion, as this came as a surprise to the market.
Although Cambodia is a relatively small market, Affin Hwang believes investors are happy about management’s swift and decisive move to capture this opportunity and its continued expansion of its footprint beyond just Malaysia.
It foresees two key catalysts driving the share price – the long-awaited Bandar Enstek plant completion in March will be the investors’ focus, as it clears the current supply bottleneck to cater to more ice cream demand.
The other is the continued drop in WMP prices alongside a stronger US dollar, which will help to translate into more cost savings and profit margin expansion.
It continues to see this step-up in capacity as the main earnings driver over the next few years, given customer demand still remains strong for Farm Fresh consumer packaged goods ice cream.
