PETALING JAYA: Fraser & Neave Holdings Bhd
(F&N) is expected to see a gradual earnings recovery in the financial year ending Sept 30, 2027 (FY27) as its dairy operations in Malaysia and Cambodia scale up. This is despite elevated input costs and persistent weakness in Indochina, which could continue to weigh on its performance.
According to analysts, the group’s ability to improve utilisation at its new facilities, strengthen distribution and restore regional sales will be key to determining the pace of its recovery.
MBSB Research expects F&N’s Malaysian food and beverage business to remain supported by domestic demand for beverages, water and dairy products, wider distribution and higher contributions from fresh milk. However, Thailand is likely to face continued challenges from softer tourism and economic conditions.
“We expect Cambodia localisation to gradually improve the cost base once utilisation builds, though start-up costs will remain a drag initially,” the brokerage said.
Following the recent share price de- rating, MBSB Research upgraded its recommendation on F&N to a “buy”, with a revised target price of RM23.28 based on 20 times FY27 forecast price-earnings ratio.
UOB Kay Hian (UOBKH) Research also maintained a “buy” recommendation, but lowered its target price to RM30 from an earlier level of RM36, citing higher costs associated with the new dairy plants. It also trimmed the FY27 and FY28 earnings forecasts by 16% and 20%, respectively.
“FY26 was a challenging year for F&N, with the road to recovery appearing long and winding,” UOBKH Research explained, adding that geopolitical headwinds and challenges from the new dairy venture were likely to persist in the near term.
Nevertheless, the research house sees improving prospects from FY27, with depressed valuations following the recent sell-off offering an attractive entry point.
TA Research noted F&N’s management expects the operating environment to remain challenging amid elevated input costs, intense consumer market competition and persistent geopolitical uncertainties.
“To mitigate these headwinds, the group will focus on improving operational stability, productivity and efficiency at F&N AgriValley as operations scale up,” it pointed out.
“In Cambodia, the group intends to progressively ramp up production and strengthen its local distribution network to support a recovery in Indochina’s performance,” it added.
TA Research highlighted that its “buy” recommendation and a target price of RM32.80 for F&N are currently under review.
Meanwhile, CIMB Research expects F&N to record 5.5% year-on-year earnings growth in FY27, supported by a gradual recovery in sales across Malaysia and Indochina, alongside easing start-up losses.
It expects new product launches, wider distribution, deeper penetration of Magnolia 100% Fresh Milk and recovering regional exports to support sales.
CIMB Research maintained a “hold” recommendation with a target price of RM23.20, citing higher input cost assumptions and start-up losses.
Kenanga Research, on the other hand, retained an “outperform” call but reduced the target price to RM24.50 from RM28.95, after cutting its FY27 earnings forecast by 16%.
It noted that milk yields at AgriValley had reached an encouraging 30 litres per cow per day, although the slower-than-expected narrowing of dairy farm losses suggested a more gradual path towards profitability.
