RHB Research has maintained its BUY call on Farm Price Holdings Bhd with a target price of RM0.42, implying around 26% upside, after the group’s first-half 2026 earnings came in within expectations.
The research house said Farm Price’s 1H26 performance was supported by strong export sales and a gradual recovery in margins, while its medium-term growth outlook remains intact with the expanded Senai facility, or Plant 2, on track to commence operations in the fourth quarter of 2026.
Farm Price’s 1H26 core profit rose marginally by 0.6% year-on-year to RM5.7 million, meeting 48% of RHB’s FY2026 earnings forecast.
Revenue increased 6.7% year-on-year to RM64.5 million, largely driven by stronger sales in Singapore, which grew about 36% year-on-year.
Singapore’s contribution to group revenue increased to around 37% from 29% in 1H25.
However, earnings growth lagged revenue expansion due mainly to higher operating costs following Farm Price’s acquisition of Food Life last year. Core profit margin consequently eased to 8.8% from 9.3% a year earlier.
On a quarter-on-quarter basis, momentum moderated in 2Q26, with revenue declining 12.1% to RM30.2 million as sales in both Singapore and Malaysia softened from the first quarter.
Management attributed the weaker performance to broadly softer market demand but expects revenue to recover from the third quarter onwards.
RHB said a key positive was the recovery in gross profit margin, which improved to 23.9% in 2Q26 from 20.3% in 1Q26, supported by lower procurement costs.
RHB remains positive on Farm Price’s growth trajectory, viewing FY2026 as a transition year ahead of a stronger capacity-led growth phase from FY2027.
Plant 2 at Senai is targeted to begin operations in 4Q26, while the group’s existing facilities are already operating at full capacity on 24-hour shifts.
The new facility will primarily support fresh-cut and other value-added products for Singapore customers, with management targeting the value-added product mix to gradually increase towards 50% after the facility ramps up.
Near-term margins could also benefit from subsidiary restructuring and manpower rationalisation. Management had previously guided for around RM0.6 million in quarterly staff-cost savings.
RHB said supply chain and input cost pressures are expected to remain manageable despite potential El Niño conditions and higher fertiliser costs.
This is supported by Farm Price’s diversified sourcing base and relatively flexible pricing arrangements, with around 80% of customers on short-term contracts that allow the company to pass through higher costs more quickly.
Following the results, RHB maintained its FY2026 to FY2028 earnings forecasts and RM0.42 target price.
