CIMB Investment Bank Bhd (CIMB Securities) has maintained its BUY call on Farm Fresh Bhd (FFB) with a revised target price of RM2.65, citing manageable cost impacts despite headwinds from the US-Iran conflict.
Analysts at CIMB Securities noted that the geopolitical tensions have affected up to 8–10% of FFB’s cost base, primarily through higher packaging, logistics and utilities. They expect the near-term disruption to HDPE resin supply, which affected the production of 1L and 2L plastic bottles over the past 10–14 days, to be mitigated by shifting production to gable-top paper cartons.
The firm added that the core dairy portfolio remains resilient, but prolonged conflict could impact higher-margin products such as ice cream. Consensus on the stock remains largely positive, with nine analysts recommending Buy, four Hold and one Reduce.
FFB’s HDPE bottle disruption affects roughly 12–13% of group sales, while gable-top cartons, which make up 8–9% of sales, currently have spare capacity to offset potential losses. Analysts highlighted that paper-based packaging supplies are adequate for now, but a prolonged conflict could tighten packaging availability across the FMCG sector.
Higher costs for dairy ingredients, fertiliser and feed remain a risk if the conflict continues, alongside potential inflationary pressures that could weigh on discretionary consumer spending.
CIMB Securities also revised FFB’s FY26–28 core net profit forecasts down by 2.7–6.2% to account for elevated operating costs and softer sales volume. The stock currently trades at 24.8 times CY27F P/E, representing an 11.4% discount to its three-year historical mean, which analysts view as an attractive entry point.
FFB’s market-leading position in Malaysia’s dairy sector, expanding regional footprint and diversified product portfolio underpin the maintained Buy rating.
As of 10.26 am, the stock price slips 0.85% to RM2.34.
