HLIB maintained its BUY call on Malayan Flour Mills Bhd (MFM) with an unchanged target price of RM0.93, after the food producer’s first-half earnings rose 28.1% year-on-year and came broadly within expectations.
MFM posted 2QFY26 core earnings of RM42.6 million, up 40% year-on-year and 1% quarter-on-quarter, taking 1HFY26 core earnings to RM84.7 million or 53.4% of HLIB’s full-year forecast.
HLIB attributed the stronger quarterly performance mainly to higher sales volumes and improved contribution margins from the flour and grain trading business, alongside better contributions from joint ventures PT Bungasari and DTSB.
PT Bungasari, MFM’s Indonesian flour milling operation, saw its contribution surge 15-fold to RM6.2 million in the first half, supported by stronger sales volumes and improved margins. DTSB’s contribution also tripled to RM18.1 million, driven by higher sales volumes and lower input costs, although lower selling prices partly offset the gains.
Looking ahead, HLIB expects earnings to benefit from improved operating efficiency at MFM’s flour mills in Malaysia and Vietnam, favourable input costs and margin expansion in its integrated poultry business as the group shifts towards higher-value products.
The research house also noted MFM’s interim dividend of 2.0 sen per share, up from 1.5 sen previously, with the shares going ex-dividend on 11 September 2026.
HLIB maintained its RM0.93 target price based on seven times mid-FY27 core earnings and highlighted the group’s 5.8% projected dividend yield and improving earnings profile.
As of 3.23 pm, the stock price increased slightly by 0.72% to RM0.695.
