BUSINESS

F&N TO POST ROBUST NET PROFIT GROWTH IN FY2023 - CGS-CIMB

07/02/2023 12:30 PM

KUALA LUMPUR, Feb 7 (Bernama) -- Fraser and Neave Holdings Bhd (F&N) is likely to post robust 11.3 per cent year-on-year (y-o-y) net profit growth in financial year 2023 (FY2023F), driven by better topline from Thailand operations, said CGS-CIMB Securities Sdn Bhd. 

In a note, the research firm said the expectation was fuelled by the influx of tourists and the baht strengthening by 0.3 per cent year-to-date against the ringgit. 

“Lower freight costs should help F&N’s competitiveness in export markets, and we expect a gradual decline in input costs from the fourth quarter of FY2022 (4Q 2022) to drive margin expansion for F&N," it said. 

In 1Q 2023, F&N's core net profit came in at RM104.6 million, dipping by 11.4 per cent y-o-y after excluding one-off gains of RM94.2 million.

On a quarter-on-quarter basis, F&N 's 1Q 2023 revenue and core net profit rose 7.1 per cent and 7.4 per cent, respectively, thanks to higher export sales, a rise in domestic sales in Malaysia from Chinese New Year festivities, and a maiden contribution from Cocoaland. 

As such, CGS-CIMB has reiterated its ‘add’ call on F&N with a higher target price (TP) of RM28.30. 

MIDF Research also maintained its ‘buy’ recommendation on F&N with a higher TP of RM33.50 as the research firm is optimistic about the company’s outlook, backed by the increase in out-of-home consumption, benefitting from the return of international tourists to Malaysia and Thailand after the reopening of the border. 

It said the additional revenue from the integration of Cocoaland and transformation of Ladang Permai Damai into an integrated dairy farm and crop plantation, declining global commodity prices, and normalising export sales to China after the reopening of China’s border would also boost the group's performance. 

“However, key downside risks which can affect F&N are raw material shortage and a sharp increase in commodity prices which could impact the cost and profitability of its product," it said. 

At 11.26 am, F&N added 88 sen to RM25.88 with 72,900 shares traded. 

-- BERNAMA


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