PETALING JAYA: Fraser & Neave Holdings Bhd
’s (F&N) recent land disposal is being viewed positively as it aligns with the group’s long-term focus on strengthening its food and beverage (F&B) business while unlocking value from non-core assets, analysts say.
Last week, F&N announced the disposal of its entire 50% stake in Vacaron Co Sdn Bhd, a joint venture with Frasers Property Holdings (M) Pte Ltd, to Tan & Tan Developments Bhd for a total cash consideration of RM178.4mil.
The valuation reflects 50% of Vacaron’s adjusted net asset value of RM360.7mil.
Vacaron’s primary asset is a 5.15-ha parcel of land in Section 13, Petaling Jaya, with a revised market value of RM360mil.
The transaction is slated for completion by the third quarter of 2027.
TA Research said it is positive on the announcement.
“Importantly, the proceeds will be channelled towards the group’s integrated dairy farming project in Gemas, Negri Sembilan, which offers significant long-term growth potential,” the research house said in a report recently.
TA Research said it believes the disposal price is “fair”, as it was based on 50% of Vacaron’s adjusted net asset value, with the land independently valued at RM360mil by property consultants Henry Butcher Malaysia.
“This ensures that the monetisation is not only timely but also reasonable from a valuation standpoint,” the research house said.
TA Research said the monetisation of non-core assets is both timely and prudent from the perspective of balance sheet management.
It noted that F&N’s net cash position declined to RM147.2mil as of the third quarter of its financial year ending Sept 30, 2025 (3Q25), from RM428.9mil in FY24, mainly due to early investments in the dairy farming project and higher working capital requirements.
“As such, the disposal gains should strengthen the group’s liquidity, preserving financial flexibility to support long-term growth and potential reinvestments,” the research house said.
After factoring in estimated taxes, transaction costs and investment outlay, the proforma one-off gain is expected to amount to RM83.2mil (about 22.7 sen per share).
This would lift the group’s FY27 earnings per share (EPS) by 14% to RM1.84 versus our earlier forecast of RM1.61 upon completion of the disposal.
Nevertheless, TA Research said it is maintaining its earnings forecasts for now, pending finalisation of the transaction targeted for 4Q27.
TA Research maintained a “buy” call on F&N with an unchanged target price of RM33.60 per share.
Meanwhile, CIMB Research also views the disposal positively as it represents a non-core divestment, allowing F&N to unlock value from its non-core property assets.
“Property development is no longer part of F&N’s core focus, with proceeds expected to be redeployed into its beverage, dairy, and food businesses, as well as the integrated agriculture and dairy farm (AgriValley) in Gemas, which commenced operations in 2Q25,” the research house said.
CIMB Research made no changes to its FY25 to FY27 earnings estimates as the disposal is a non-core, with completion only expected by 4Q27.
The research house maintained its “hold” call with an unchanged target price of RM28.80, adding that, while it continues to like F&N for its strong brand equity and leading market positioning in the F&B sector, it believes valuations are fair given muted earnings growth for the compounded core net profit annual growth rate of minus 2.4% over the three-year period of FY24 to FY27, weighed down by a soft operating environment and development costs from the new dairy farm.
MBSB Research said at present, F&N’s priority is to bring the integrated farm to full operational capacity, with subsequent capital expenditure (capex) to be assessed once the facility is running.
“The FY24 capex amounted to RM253.7mil, with forecast spending of RM254.6mil and RM263.3mil for FY25 and FY26, respectively,” the research house said.
MBSB Research said the disposal eliminated exposure to property development risks while providing fresh capital to accelerate dairy expansion.
“Over the longer term, growth will continue to be underpinned by resilient demand for F&B staples, alongside structural upside from the Gemas integrated dairy project,” the research house said.
MBSB Research maintained a “buy” call on F&N, with unchanged target price of RM32.08.
