Kenanga Research has raised its earnings forecast for Fraser & Neave Holdings Bhd (F&N) for the financial year ending Sept 30, 2023 (FY2023) by 16%, due to the privatisation of Cocoaland Holdings Bhd and expectations of stable margins in view of the easing of input prices, especially in the second half of calendar year 2023.
With the completion of the acquisition on Nov 4, Cocoaland is now a wholly-owned subsidiary of the F&N group, which would enhance the latter’s top line, the research house said.
“Top line performance will remain strong, thanks to the economy’s reopening, and price adjustments in both Malaysia and Thailand, with its halal food segment weighing in on strong contributions from the export market,” Kenanga Research said in a note on Wednesday (Nov 9).
The research house views F&N favourably as the reopening of the economy has boosted sales, especially in the beverage, ready-to-drink product, out-of-home, and hotel, restaurant and catering (Horeca) segments.
“F&N’s earnings stability is underpinned by steady demand for staple food items, despite the uncertain global economic outlook.
“As such, we raise our target price by 12% to RM26.93, and upgraded [our call] to an ‘outperform’ recommendation,” it said.
Meanwhile, CGS-CIMB Securities Sdn Bhd expects the group to post an 8% growth in net profit year-on-year in FY2023, due to higher sales backed by a gradual recovery in the Horeca segment.
The higher net profit would be supported by increased tourist arrivals in Thailand and Malaysia, from the reopening of borders and recent price hikes in both domestic and export sales, the research firm said.
“Since the fourth quarter of FY2022, prices of certain key commodities, such as milk and palm oil, have been on a declining trend, which bode well for F&N from a margin standpoint,” CGS-CIMB said.
At the noon break, F&N had risen 20 sen to RM20.14, with 133,800 shares changing hands.
