CGS CIMB has maintained a DCF-based TP at RM29.80 for Fraser &Neave Holdings Bhd on the back of its attractive valuation, strong balance sheet and beneficiary of the lifting of lockdown measures especially ongoing recovery in HORECA sales
It said that while it expects Input costs such as skimmed milk (SMP), sugar, and palm oil have trended higher since Jun 21 by 20-30% and this would negatively impact F&N’s margins, F&N aims to mitigate this impact via higher economies of scale (improved demand from HORECA segment), better overall cost control, and active hedging policies.
The research house also expects F&N to continue raising its selling prices in stages to pass on the higher costs.
On qoq basis, 1QFY22 revenue and core net profit rose 23.5% and 49.1% respectively. This is attributed to higher export sales, increase in local sales ahead of the Chinese New Year festivities in 2QFY22.
It said that 1QFY22 EBITDA margins rose 2% pts qoq to 12.5% due to price increases, higher economies of scale and cost optimisation strategies
