MIDF Research has maintained its “buy” call on Fraser and Neave Holdings Bhd (F&N) with an unchanged target price of RM33.50, premised on the company’s bullish prospects.
In a note today, the investment bank said F&N remained one of the top picks in the sector, underpinned by the additional revenue from the successful integration of Cocoaland Holdings Bhd, as well as increased out-of-home consumption, driven by a surge in tourists visiting Malaysia and Thailand.
It added that the prevailing heatwave boosted demand for carbonated soft drinks and water in Southeast Asia, and also resulted in better export sales to China.
Meanwhile, Kenanga Research has upgraded its call on the food and beverage (F&B) giant to “outperform” call from “market perform”, with a target price of RM 28.44.
“Risks to our call include an uptick in food commodities prices, sustained high inflation eating into consumer spending power and downtrading by consumers such as switching to cheaper alternatives,” it said.
F&N’s earnings prospects remain positive, premised on the full-year impact of the economy reopening, accommodative policies, bigger celebrations of festivities, the return of international tourists to both Malaysia and Thailand and a recovery of export sales underpinned by a weak currency.
Meanwhile, the downside risk to its margins is a lot more manageable given the US dollar’s recent weakness against both the ringgit (-2.0 per cent) and Thai Baht (-6.0 per cent), although the same cannot be said for food commodity prices which could still remain volatile due to the ongoing geopolitical tensions.
F&N’s net profit increased to RM99.37 million in the third quarter ended June 30, 2023 (3Q 2023) compared to RM97.50 million in 3Q 20222.
Group revenue rose to RM1.33 billion from RM1.12 billion previously, driven by robust festive sales, improvement in both F&B Malaysia and F&B Thailand domestic markets, recovery in export markets, and the additional contribution from Cocoaland, it said in a filing with Bursa Malaysia.
At 11.33 am, F&N’s shares rose eight sen to RM25 with 1,500 units traded.
