PETALING JAYA: Farm Fresh Bhd
’s expansion into Cambodia and its growing ice cream business is expected to emerge as one of the key growth drivers over the next three years as the dairy company looks beyond Malaysia.
Hong Leong Investment Bank (HLIB) Research, who initiated coverage on the company with a “buy” call and a target price of RM2.84, said Farm Fresh was increasingly being viewed as more than just a domestic milk producer, given its expanding regional footprint and diversification into higher-margin products.
“We forecast net profit to rise from RM130mil in financial year 2026 (FY26) to RM220mil by FY29, representing a three-year compound annual growth rate of 19.2%,” the research house said in a report.
Revenue is expected to increase to RM1.74bil by FY29 from RM1.12bil in FY26.
According to the research house, Malaysian milk alongside Cambodia is expected to be significant contributors to the increases above.
To recap, Farm Fresh runs seven dairy farms and five processing facilities across Malaysia, Australia and the Philippines.
It sells more than 220 products under 12 brands, from chilled and UHT milk to yoghurt, milk powder, butter and ice cream, through supermarkets, convenience stores, cafes and more than 3,800 schools.
The company’s pairing of Malaysia’s largest commercial dairy herd has enabled it to set its prices on shelf below its rivals, but yet earn the highest gross margin among Malaysia’s three big milk brands.
As for Cambodia, Farm Fresh entered it in August 2025 as Thai brands left the shelves amid a consumer boycott, and already sells roughly RM5mil a month, mostly chilled milk.
“Local production at Alpha City from November 2026 removes freight worth about 14% of landed cost, and we expect Cambodian revenue to triple from RM64mil in FY27 to RM195mil by FY29, more than half of it from chilled, where Farm Fresh already leads,” HLIB Research said.
The facility will also improve supply capacity, while a second building equipped with two high-speed ultra-high temperature milk production lines is expected to begin operations in the first quarter of calendar year 2027.
Furthermore, the company’s ice cream segment is being supported by its Inside Scoop parlours and expanding packaged ice cream distribution network.
“We expect ice cream revenue to nearly double to RM249mil by FY29, lifting its share of group gross profit from 19.3% to 23.2%.
“The Bandar Enstek ramp-up will be able to triple capacity to some one million pieces daily from 350,000 pieces at its Taiping plant,” the research house said.
HLIB Research expects group gross margin to improve from 32.9% in FY26 to a record 33.9% by FY29, driven by a richer product mix and lower production costs in Cambodia.
It noted that the September RM188mil private placement would help fund the company’s expansion, with free cash flow expected to turn positive at RM108mil in FY28.
“We also expect return on equity to rebuild from 12.9% in FY27 to 15.9% by FY29 as Enstek and Alpha City move from cost to contribution.”
An analyst told StarBiz that the next three years will be important as the company ramps up production capacity and begins to realise the returns from its investments.
“If execution goes according to plan, these initiatives could provide a meaningful boost to earnings,” the analyst said.
