PETALING JAYA: Despite recent challenging times, Fraser & Neave Holdings Bhd
(F&N) appears to have weathered operating headwinds, with earnings set to improve going into financial year 2027 (FY27).
UOB Kay Hian (UOBKH) Research said the group is seeing improving yields from its dairy operations, while its Cambodian business is adapting to the disruption from the Cambodia-Thailand border conflict, setting the stage for a gradual recovery in earnings.
“Yields for F&N’s dairy segment have improved to around 30 litres per cow per day, from around 25 litres in the third quarter of FY26 (3Q26), as the group continues to develop its dairy farms.
“Currently, the stable of milking cows remains steady at over 3,000, with F&N’s target of 10,000 cows by 2029 remaining largely intact,” the research house said in a note to clients.
It noted the initial batch of milking cows have also begun yielding again, with production expected to improve in subsequent lactations.
“Market share for F&N’s ultra-high temperature (UHT) milk has also improved from 1% to 2% previously to 5% to 6%.
“We understand that F&N’s focus for now remains on growing the UHT market rather than competing aggressively for market share.”
The group is expected to eventually diversify into higher-value products, such as chilled milk and yoghurt, once its UHT segment begins to deliver.
“We understand that F&N’s focus for its dairy segment remains on optimisation at this time.
“The group is currently looking to maximise yields from its existing farms, with short-term expansion potentially being sidelined in favour of building its team’s expertise,” added UOBKH Research.
“While its medium to long-term targets remain intact, we believe any additional scaling-up may be delayed until after F&N has sufficiently developed its farm operations, following which it may begin to import heifers more aggressively.”
The research house said while the Cambodia-Thailand conflict continues to weigh heavily on F&N’s exports to Thailand, on-the-ground sentiment in Cambodia remains resilient.
“Following the escalation of the conflict, F&N began exporting key brands, such as Bear Brand, from Malaysia.
“We understand that pushback against the Malaysian products has been marginal despite the brands being identical.”
According to the research house, consumers’ disdain appears to be focused largely on Thai imports rather than the brands themselves, with Malaysian-exported products steadily gaining traction.
Meanwhile, domestic demand in Thailand also appears robust, with sales in 3Q26 continuing to post steady growth.
F&N’s Cambodia plant continues to make steady progress towards localising the production of key products, with the group expected to launch a new brand in the coming months.
The research house said it also understands that F&N is weighing an expansion of its Pulau Indah plant to support exports from Malaysia.
However, while demand in Cambodia for Malaysian-exported products remains solid, it added margins are narrower due to higher logistics costs.
UOBKH Research maintained a “buy” call on the stock with a lower target price of RM36 a share (from RM38.70).
