TA Research has maintained its earnings projections for F&N.
PETALING JAYA: Fraser & Neave Holdings Bhd
(F&N) is likely to experience a softening demand due to the absence of festive sales in the second half of 2024.
However, the group would likely be able to cushion the impact of rising input costs for certain commodities, such as cocoa powder, rice, sugar, and gelatine, through its cost optimisation strategy while offsetting the increase with raw materials that have dropped from their peak prices such as palm oil and skim milk powder.
Based on those factors, TA Research has maintained its earnings projections for F&N at this juncture.
It has a “hold’’ recommendation and target price of RM30 a share under review, pending more insights from an analyst briefing scheduled for today.
Kenanga Research on the other hand believes F&N may be benefitting from consumers opting for Asian brands over Western ones.
This will continue to be buoyed by the return of tourists to Malaysia and Thailand, which would boost both its domestic and export sales.
Kenanga Research said it likes the company’s focus on high-growth halal packaged foods and dairy products, while the streamlining of the manufacturing facilities for its Sri Nona and Cocoaland subsidiaries should boost efficiency and hence its bottom line.
The research house raised its financial year 2024 (FY24) and FY25 net profit forecasts by 12% and 13%, respectively, after raising its assumptions on sales and margins.
Meanwhile, MIDF Research said its earnings forecasts for FY24-FY26 remains unchanged.
The research house’s target price (TP) is based on an unchanged price-earnings ratio (PER) of 22.6 times pegged to FY24 earnings per share of 163.6 sen.
The research house is optimistic about F&N’s FY24 prospects.
It also likes the group’s initiative in the integrated dairy farm segment to improve self-supply and cater for the underserved fresh-milk market in Malaysia.
MIDF Research said that F&N is currently trading at an undemanding FY24 PER of 19.4 times versus its three-year historical average mean PER of 22.6 times, while offering a dividend yield of 2.4% in FY24.
The downside risks for the company include disruption to global supply chains for commodities resulting from avoidance of the Suez and Panama canals, ongoing congestion at major Brazilian ports, climate change in major exporting countries and volatility in currency rates for the Thai baht and US dollar, MIDF Research said in a report on the group.
Kenanga Research raised its TP by 13% to RM38.25 a share from RM33.80 previously, based on an unchanged 22 times FY25 PER, consistent with the industry’s average forward PER.
