PETALING JAYA: Fraser & Neave Holdings Bhd
’s (F&N) dairy farm losses have likely peaked, or are close to their peak, as milk production at F&N AgriValley continues to increase, according to Kenanga Research.
The research house said its management had initially guided for the losses to peak around mid-2026 as output ramps up, while targeting the integrated dairy farm to break even by calendar year 2028 through higher milk production and greater feed self-sufficiency.
“We believe the upside from its integrated dairy strategy is yet to be fully appreciated, particularly as management accelerates the rollout of Magnolia Fresh Milk while dairy farm losses are likely at or near their peak,” Kenanga Research said.
It estimated the dairy farm imposed an additional earnings drag of approximately RM38mil year-on-year during the nine months ended June 30, 2026, based on management’s disclosure that the Malaysian food and beverage business would have recorded a 16% growth in earnings before interest and tax excluding dairy losses and foreign-exchange effects.
F&N’s nine-month core net profit fell 22% to RM303mil, meeting Kenanga Research’s expectations, but falling short of consensus forecasts.
Revenue declined 6% as a 19% contraction in the Indochina food and beverage division – driven by subdued demand, prolonged Thailand-Cambodia border closures and unfavourable currency translation – outweighed 4% growth in Malaysia.
Kenanga Research cut its financial year 2026 (FY26) and FY27 earnings forecasts by 5% each to reflect a slower Indochina recovery and delays in commissioning F&N’s new Cambodian dairy plant.
It lowered the target price of F&N to RM34.45 per share from RM37.40, but maintained an “outperform” recommendation, citing resilient demand for essential food and beverage products and the group’s longer-term dairy prospects.
The research house said domestic demand should remain solid, supported by market-share gains, wider outlet coverage and continuing route-to-market initiatives.
Separately, TA Research reduced its FY26 core earnings forecast for F&N by 7.6% after lowering the earnings before interest and tax margin assumption by 0.8 percentage points to 12.5%, while retaining FY27 and FY28 projections. It lowered the stock’s target price to RM32.80 per share following revised FY26 dividend assumptions.
