RHB Investment Bank Bhd (RHB Research) maintained its BUY call on Farm Price Holdings Bhd with a revised target price of RM0.42 from RM0.52, implying about 34% upside, despite the group’s first quarter earnings coming in below expectations due to higher operating costs from newly acquired subsidiaries.
The research house said Farm Price posted a core net profit of RM2.5 million for 1Q26, up 0.8% year-on-year, accounting for only 16% of its full-year forecast. Revenue, however, rose 15.2% to RM34.3 million, driven by stronger sales in Singapore and contributions from newly consolidated subsidiaries.
According to RHB Research, earnings growth was constrained by a larger cost base following the acquisition of Food Life, with higher administrative expenses estimated at an additional RM1 million per quarter. As a result, core net margin narrowed to 7.4% from 8.5% a year earlier.
The research house said Farm Price’s medium-term growth prospects remain intact, supported by continued expansion in its value-added food segment and growing demand from the Singapore market. While the integration of Food Life may weigh on earnings in the near term, it is expected to broaden the group’s customer base and support longer-term volume growth.
RHB Research expects costs to gradually normalise from FY27 as operations are streamlined and productivity improves. It also highlighted the commissioning of the expanded Senai plant in the second half of 2026, which is expected to increase production capacity by about 30% and support further growth.
Following the results, the research house lowered its FY26-FY28 earnings forecasts by between 9% and 28% to reflect higher operating expenses and potential cost pressures from ongoing geopolitical tensions, but maintained that Farm Price’s long-term growth story remains compelling.
As of 10.29 am, the stock price dips 3.13% to RM0.31.
