K&N Kenaga Research has reiterated an “Outperform” recommendation to Fraser & Neave Holdings Bhd to a trading price of RM32.45 (RM33.15) previously on a FY22E PER (5-year mean).
The Investment Bank said it justifies its recommendation given the sustained demand from its food business and growing exports mitigated by the one-off Prosperity Tax. “Trading at a 5-year low, we feel the price bottoming out with the reopening of the economy,” it said.
The investment house said that premised on the ease of restrictions coupled with earnings ahead.
“The group’s investment in the Sri Nona Group has proven its worth and will enhance demand in the coming festive seasons; also providing the platform to venture into the halal food segments and product offerings and expansion of its halal exports to the MENA region and ASEAN,” says Kenanga.
Despite lower consumer activity, the Group maintained its market leadership in all key categories for the year and launched 13 new products. It has seen an increased in the number of products endorsed with the Healthier Choice logo in its portfolio to 69.
Commodities prices are expected to remain elevated in the immediate term and coupled with supply chain costs, we expect GP to remain at this level (c.29%) in the immediate term.
“We are positive on its strong net cash position (RM555million) implying further capex ahead will be funded through internally generated earnings, while further uptick in input prices and excise duties would be absorbed comfortably.”
