PETALING JAYA: Fraser and Neave Holdings Bhd
(F&N) plans to expand its product range to include butter, cream, and yoghurt, viewing these as additional opportunities beyond fresh milk, depending on the success of the F&N AgriValley dairy farm.
F&N chief executive officer Lim Yew Hoe said the F&N AgriValley is currently in its Phase 1.1 stage, and it is important to produce local butter to replace the imported varieties, while locally produced cream, which is widely used in hotels, can also help reduce reliance on foreign supplies.
He added that the company is also in talks with stakeholders about utilising green energy at its Gemas farm.
Lim was speaking yesterday during F&N’s results briefing for its financial ended Sept 30 (FY25).
Lim stated that F&N will share the information once the company has the details and has concluded discussions with the relevant stakeholders.
He said this in response to a question about the company’s intention to quickly reduce its loans to create opportunities for major capital investments.
For FY25, F&N’s total loans decreased to RM592mil from RM706mil in the previous corresponding period, while its total debt declined to RM656.2mil from RM760.9mil.
At the group’s 2,000-acre F&N AgriValley integrated dairy hub, development of the dairy manufacturing plant is nearing completion with commercial milk production slated for the first quarter of FY26, marking an exciting phase in the group’s journey towards upstream dairy integration.
Located in Pasir Besar, the farm now houses over 4,000 cattle - including lactating cows, pregnant heifers and calves - thriving in modern, climate-controlled barns designed to optimise animal comfort and productivity.
This month, an additional 2,500 pregnant heifers from Chile are scheduled to arrive, further expanding the herd and accelerating milk production under the Magnolia Brand.
Looking ahead, Lim said the group remains committed to long-term growth through investments that broaden its consumer reach and reduce environmental impact.
“Strategic initiatives such as F&N AgriValley reflect our ambition to offer Malaysians world-class fresh milk at affordable prices and contribute to the nation’s food security goals.
“While these investments may temporarily affect margins, we are confident with the potential returns in line with our plans and milestone targets,” he said.
Meanwhile, Kenanga Research described F&N as among the key beneficiaries of the Visit Malaysia 2026 tourism drive, given its strong portfolio of ready-to-drink products and broad domestic reach.
The research house noted the government’s recent RM100 cash aid for eligible citizens to be utilised between end-August and December, with F&N’s products included in the list of eligible goods, should continue to support near-term domestic demand, partly offsetting temporary headwinds in other regional markets suffering from softer tourism and export disruptions to Cambodia due to a border dispute and a civil war in Myanmar.
“We believe F&N is well-positioned to benefit from another round of RM100 cash aid starting in mid-February next year, as well as rising tourist arrivals and stronger out-of-home beverage consumption during Visit Malaysia 2026,” the research house noted.
On the other hand, F&N’s integrated dairy farm project remains on track, with both herd expansion and feed-crop activities progressing well.
The research house has maintained F&N’s earnings estimates for next year, but cut dividend forecast to 70 sen from 85 sen, implying dividend ratio of 45%.
It has reiterated an “outperform” call on the stock with a target price of RM33.95.
TA Research said in a note to clients that F&N’s results for FY25 were lifted by a robust showing in the fourth quarter.
The research house, which maintained its FY26 and FY27 earnings estimates for F&N, said domestic demand in the first half of next year is anticipated to remain strong, supported by improved consumer sentiment that is likely to spur festive spending and sales volumes within the hotel, restaurant and cafe channel in conjunction with Visit Malaysia 2026.
TA Research has kept a “buy” call on the stock with an unchanged target price of RM33.60.
Meanwhile, CIMB Research said F&N’s valuations have turned attractive.
Despite the near-term margin pressure, the research house said it expects F&N to post a mild sales recovery in FY26, which will be supported by a gradual pick-up in both domestic and export sales.
Key drivers include new product launches, and stronger export sales to Cambodia following a peace accord between Thailand and Cambodia, which should benefit its Thai operations.
That said, margin recovery is likely to remain muted in the near term, as profitability will continue to be weighed down by development costs from the integrated dairy farm in Gemas, Negri Sembilan and higher marketing expenses to support new product promotions.
CIMB Research upgraded F&N to a “buy” from a “hold” and set a higher target price of RM32 from RM28.80 earlier. — Agencies
