MIDF Research is optimistic about F&N’s prospects.
PETALING JAYA: Analysts remain upbeat on Fraser and Neave Holdings Bhd’s (F&N) prospects, following the group’s first-quarter results for its financial year 2025 (1Q25), which were within their expectations.
F&N posted a core net profit of RM156.9mil in 1Q25, on the back of RM1.4bil in revenue, primarily driven by higher sales in both Malaysia and Thailand.
Kenanga Research, in its latest report, said: “We believe F&N may continue to benefit from rising tourism in Malaysia and Thailand, especially with its ready-to-drink beverages.”
The research house also liked the group’s strategic focus on high-growth halal packaged food and dairy segments.
“The construction of the integrated dairy farm in Gemas, Negri Sembilan, remains on track and advancing steadily, though the delivery of the first batch of livestock has been delayed since end-2024,” it added.
Kenanga Research revised its financial year 2025 (FY25) to FY26 earnings forecasts for F&N lower by 5% to 7% to reflect higher tax assumptions.
Notably, the minimum wage increase, effective this month, and the sugar tax hike, which took effect in January 2025, are expected to have only a minimal impact on the group’s costs, estimated at just 1% of profit.
The research house maintained its “outperform” call on F&N, but lowered its target price (TP) to RM34.40 per share from RM36.30 previously.
“We continue to like F&N for its defensive earnings, given the stable demand for essential food items despite high inflation and an uncertain global economic outlook.”
Additionally, it said the growing demand for ready-to-drink products, an area where F&N has a strong foothold, positions the company well to benefit from the recovery in domestic consumption and the return of tourists in Thailand.
Long-term growth prospects are also supported by F&N’s investment in a sizeable dairy farm in Gemas.
Meanwhile, TA Research expected F&N’s top line growth to remain solid in FY25, supported by resilient growth in tourist arrivals, which will drive greater demand for its operations in Thailand.
“As a result, we project its Thailand food and beverage division’s (F&B Thailand) revenue to grow steadily by 1.7% year-on-year to RM2.3bil in FY25,” it added.
TA Research said F&N’s management reported that its integrated dairy farm project remains on track.
Phase 1 infrastructure development is progressing steadily in preparation for the arrival of livestock.
“Hence, we believe the first milk production is proceeding as planned, with the latest target set for 1Q of 2026,” it added.
TA Research maintained its “buy” call on the stock with an unchanged TP of RM34.44 a share, with no changes to its FY25 to FY27 earnings projections.
MIDF Research is also optimistic about F&N’s prospects, supported by sustained demand for out-of-home beverages, a rebound in tourism across Thailand and Malaysia, and a shift towards local brands.
Moving forward, the research house said F&N remains focused on driving growth through enhanced route-to-market capabilities, operational efficiencies and the ongoing development of its Gemas dairy farm and dairy manufacturing plant in Cambodia.
Stabilising commodity prices and a favourable foreign-exchange environment are also expected to support profitability in the upcoming quarters.
The research house kept its “buy” call on F&N with an unchanged TP of RM36.77 per share.
At the close yesterday, F&N gained 1.19% to RM25.50.