Hong Leong Investment Bank Bhd (HLIB) initiated coverage on Malayan Flour Mills Bhd (MFM) with a BUY rating and a target price of RM0.93, implying a 60% upside from its current share price of RM0.595. HLIB said the food producer’s integrated operations, improving earnings profile and attractive dividend yield of 6.7% could support further valuation re-rating.
HLIB Research described MFM as a leading Southeast Asian food producer with businesses spanning flour milling, grains trading, integrated poultry and aqua feed manufacturing. The research house said the group’s integrated food production model provides earnings resilience by allowing it to capture value across different stages of the supply chain while improving procurement efficiency and operational synergies.
The research house expects MFM’s core earnings to grow at a three-year compound annual growth rate (CAGR) of 7.5% between FY26 and FY28, supported by stronger operational efficiency, favourable input costs and improving margins from its poultry segment.
HLIB highlighted Vietnam’s expanding flour consumption as a key long-term growth driver, noting that the country’s wheat flour consumption per capita remains below regional peers such as Malaysia and Indonesia. Rising household incomes, a growing middle class and changing consumer preferences are expected to sustain demand growth.
The research house also pointed to MFM’s planned capacity expansion, including a 25% increase in Vimaflour’s flour milling capacity in Vietnam and further development of its integrated poultry platform.
At the current valuation, HLIB noted that MFM trades at FY26 to FY28 price-to-earnings multiples of 4.1 times to 4.6 times, which it believes does not fully reflect the company’s improving earnings outlook, strong balance sheet and dividend appeal. The RM0.93 target price is based on seven times mid-FY27 core earnings per share of 13.3 sen.
As of 9.54 am, the stock price was flat at RM0.595.
