Kenanga Research said the implementation of the sugar tax would not be
KUALA LUMPUR: New products by Fraser & Neave Holdings Bhd
are seen as key drivers for the group amid slow spending trend and high production costs.
"New product innovations are expected to be the primary strategy for capturing a larger market share," said Kenanga Research in its Friday morning report.
Kenanga added that the group's high cost could be mitigated by its improving efficiency following capital investments and restructuring.
"Heavy investments by the group for better machinery could soon translate into better economy of scale. This could be further boosted by the group’s recent restructuring exercise which resulted in streamlined overheads."
The research house also believes that the group may benefit from weaker domestic currency as more than 50% of its sales are transacted in foreign currency while production costs are assumed to have 40% exposure.
F&N had yesterday anounced its third quarter financial results for 2018, bringing 9M18 core net profit to RM318.mil, which accounted for about 87% and 82% of Kenanga's and consensus forecasts.
"We deem the results to be broadly within expectation due to poor seasonality typical of the 4Q period. No dividend was declared as expected, as the group typically pays dividends twice a year," said Kenanga.
It maintained underperform on F&N with an unchanged target price of RM32.15.
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