PETALING JAYA: Farm Fresh Bhd
’s long-term growth remains intact, supported by sturdy fundamentals amid current challenges.
Despite the group’s latest financial year 2026 (FY26) results which came in below market expectations, most research houses have maintained their “buy” calls on the stock.
In a report, Kenanga Research said Farm Fresh’s slower-than-expected ice cream ramp-up amid the delayed Enstek plant commissioning, alongside its FY26 earnings miss, prompted a sharp 5% share price decline last Friday.
“However, we believe current valuations broadly reflect those near-term execution risks,” it added.
Kenanga Research has cut Farm Fresh’s FY27 earnings forecast by 7% mainly to account for the slower-than-expected ramp-up in ice cream volumes following the delayed commissioning of the Enstek plant, while introducing its forecasted FY28 numbers.
It has also lowered the stock’s target price to RM2.25 from RM2.40 earlier.
Kenanga Research likes Farm Fresh for its market leadership in ready-to-drink milk segment, underpinned by a vertically integrated “grass-to-glass” model, its strategic foray into high-margin categories like ice cream and its innovation-driven product portfolio.
Meanwhile, the group continues to strengthen its broader cold-chain and distribution network through initiatives such as the proposed acquisition of Amelia Ice Cream in Sabah and the upcoming Cambodia plant, both of which support its longer-term regional dairy expansion.
TA Research in a note to clients, said it has cut Farm Fresh’s FY27 and FY28 earnings forecasts by 6.3% and 4.6% respectively, after incorporating the FY26 results.
On Farm Fresh’s outlook, it noted that spot prices for whole milk powder have risen by about 19% year-to-date and have remained elevated at around RM3,700 per tonne since February 2026.
Encouragingly, current spot prices remain below the corresponding year-on-year levels, while the group has secured lower-priced physical deliveries through end-2026.
This suggests that gross profit margins should remain stable through the third quarter of FY27.
Due to ongoing geopolitical tensions, Farm Fresh has faced cost pressures from higher plastic packaging, diesel, and fertiliser expenses, which collectively account for approximately 10% of total operating costs.
To strengthen its presence in Sabah, Sarawak and the Brunei market, Farm Fresh has also acquired Amelia Ice Cream in Sabah for RM35mil.
Following its earnings revision, TA Research has lowered the stock’s target price to RM2.91 from RM3.05 previously.
RHB Research, meanwhile, said it maintained a positive stance on the stock, premised on the promising growth prospects supported by an ambitious ice cream market penetration, regional expansions, and more new product launches.
The research house also believes Farm Fresh’s pricing power, backed by its strong brand equity, should mitigate the cost challenges stemming from the Middle East war.
Looking further ahead, RHB Research said the commissioning of the Bandar Enstek ice cream plant in mid-2026 and strategic acquisition of Amelia Ice Cream to facilitate its entry into Sabah and Sarawak markets should propel robust ice cream sales.
Meanwhile, regional markets – the Philippines and Cambodia – are generating encouraging sales traction, and profitability should improve after the Cambodian production plant comes online by mid-2026.
The research house has set a new target price of RM2.69 per share.
