KUALA LUMPUR: TA Securities has raised Fraser & Neave Holdings Bhd
's (F&N) financial years ending Sept 30, 2023 to 2025 (FY23-FY25) earnings estimates by 5.7% to 12.6%.
“We raise our forecast earnings of FY23/FY24/FY25 by 5.7%/2.7%/12.6%, respectively, as reflective of weakened ringgit outlook that beneficial to export and stabilised raw material costs,” TA said.
The research house has also upgraded F&N to a “buy” with an unchanged DDM-driven target price of RM29.70 following the recent its recent share price weakness.
F&N’s net profit rose to RM99.37mil in the third quarter ended June 30 from RM97.5mil in the previous corresponding period, while revenue improved to RM1.3bil from RM1.1bil a year earlier.
For the cumulative period of nine months, F&N registered a higher net profit of RM399.34mil from RM284.32mil previously. Revenue for the period rose to RM3.76bil from RM3.33bil.
“F&N 9MFY23 core net profit of RM353.8mil after stripping of exceptional items came in above ours but within consensus’ full-year estimates of 82.9% and 77.1%, respectively,” TA said.
The research house expects domestic demand to remain resilient, aligned with the gradual recovery of the Malaysian economy.
“However, we anticipate lower quarter-on-quarter sales growth in the upcoming final quarter, given the conclusion of the festive season in Malaysia. Conversely, F&N Thailand is anticipated to experience an uptick in revenue due to strong exports and improved domestic sales performance,” TA said.
Meanwhile, Kenanga Research said F&N’s 9MFY23 core net profit of RM312.2mil met its expectation at 72% of full-year forecast but missed market expectations at only 66% of the full-year consensus estimate.
“F&N’s earnings prospects remain positive, premised on the full-year impact of the economy reopening, accommodative policies, bigger celebrations of festivities, the return of international tourists in both Malaysia and Thailand and a recovery of export sales underpinned by a weak currency.
“Meanwhile, the downside risk to its margins is a lot more manageable given the recent weakness of the US dollar against both the ringgit and Thai baht, although the same cannot be said for food commodity prices,” Kenanga said.
The research house kept its target price at RM28.44 based on FY24F PER of 22x consistent with the industry’s average forward PER. However, it upgraded F&N to “outperform” from “market perform” as value has emerged after the recent weakness in its share price.
