PB Research has an “Outperform” call on Rhone Ma Holdings Bhd with a fair value of RM0.88, ascribing 12X PER to its CY23F EPS of 7.1 sen per share.
It said that it believes its diversification and expansion into dairy farming should provide the impetus for multiple-year growth in the future.
The research house is projecting a 3-year earnings CAGR of 15%, as we believe population growth and higher disposable income should lead to higher demand for animal health products.
PB Research said that the End-to-end animal health solution segment should continue to drive earnings growth in the near to medium term adding that it can see the potential of its new dairy farming business in driving long-term growth.
Under the National Dairy Industry Development Strategic Plan, Malaysia is aiming to achieve 100% self-sufficiency for fresh milk by 2025 while the current ratio stood at only 65%.
Currently, the research house said that Rhone Ma’s farm has a herd of 300 cows but this is expected to grow to 500 cows by the end of FY22. The Group would predominantly be focusing on producing A2 milk, which is healthier than regular cow’s milk and more suitable for individuals with lactose intolerance.
