PETALING JAYA: Fraser & Neave Holdings Bhd
(F&N) can expect a softer second half of financial year 2026 (2H26) compared to 1H26 due to rising cost pressures and higher-than-expected startup losses at its Cambodian dairy plant and and integrated dairy farm F&N AgriValley (FNAV).
The group expects a 7% to 9% hike in the cost of goods sold due to rising cost pressures – the impact of which is to be mitigated via tighter cost controls – price hikes, lower trade discounts and better efficiencies, said CIMB Securities Research.
“We have lowered our financial year 2026 (FY26) to FY28 earnings per share forecasts by 2.6% to 6.7% to reflect higher-than-expected losses from FNAV and the new Cambodian dairy facility, and higher input cost assumptions,” it added.
Accordingly, its target price (TP) has been lowered to RM31.60 a share. Its TP is pegged to 23.2-times 2027 price earnings ratio (P/E) and it retains its “hold” call on the stock.
“While F&N trades at about a 30% discount to consumer staples peers’ 35.4-times 2026 P/E, we view this as justified given muted near-term earnings growth, with our FY25-FY28 core net profit compounded annual growth rate at 0.4%, and lingering uncertainty over potentially prolonged startup losses at its new integrated dairy farm,” CIMB Securities said.
CGS International (CGSI) Research, meanwhile, reduced its FY26, FY27, FY28 and FY29 core profit estimates by 25.6%, 13.5%, 9.2% and 4.2%, respectively, following a review of its estimates post-second quarter (2Q26) results and analyst briefing.
“While management expects to tweak product prices to account for the higher input costs that hit F&N in 2Q26, we have tweaked downward our demand and margin estimates on slower demand dynamics as a result of the energy market dislocations,’’ CGSI Research said.
CGSI Research reiterated its “add” call on F&N with a reduced TP of RM37 a share following the reduction in its estimates.
“The shift towards local manufacturing is expected to reduce reliance on exports from Thailand and Malaysia, improve cost efficiency, and mitigate future cross-border supply risks,’’ said TA Research.
The research house maintained its “hold” stance with an unchanged TP of RM33.60 a share.
