F: Positive Outlook Sustained as Growth Initiatives Underpin Maintained ‘Buy’ Rating

TA SECURITIES has reiterated its “Buy” recommendation, maintaining a positive outlook on the company’s prospects, despite a modest downward adjustment to its FY26-FY27 earnings forecasts. The investment bank has set a target price of RM0.25, representing a 25.0% upside from the last traded price of RM0.20.

The firm’s positive stance is underpinned by resilient domestic demand, ongoing product innovation, and significant advancements in its integrated dairy operations, which are expected to drive growth into FY26.

Performance Overview

In FY25, the company reported stable revenue of RM5.2 billion, primarily bolstered by robust domestic demand. This strong local performance helped mitigate softer market conditions experienced in Indochina during the second half of the fiscal year. Key contributors to domestic strength included the successful introduction of new contemporary products, such as 100PLUS Power Peach and F&N Sparkling, alongside the expansion of health-oriented beverages under the Nutriwell brand. Additionally, increased export sales to Africa and growing contributions from its dairy farming business and school milk programmes further supported revenue.

Strategic Growth Initiatives

Looking ahead, the company anticipates continued resilient topline performance in FY26. This is expected to be driven by ongoing product innovations, a projected recovery in demand within Thailand, and further enhanced contributions from the expanding dairy farming segment.

Significant progress has been made in the dairy farming project. Following the initial import of 2,500 heifers in April 2025, the total herd has now expanded to 4,400 cattle. Management confirmed the recent arrival of a second batch of 2,500 pregnant heifers from Chile, with lactation scheduled to commence in 2QFY26. Upon full integration, the total herd size is projected to reach approximately 6,900 cattle. Operationally, the group has achieved an impressive average daily milk yield of 28 litres per cow, significantly exceeding the industry average of 15 litres. The new Gemas dairy manufacturing facility is also on track for commercialisation in 1QFY26, which is expected to enhance production efficiency and supply chain integration.

Financial Outlook

While FY26-FY27 earnings forecasts have been modestly revised lower by 2.4-3.9% after incorporating FY25 results, TA SECURITIES maintains confidence in the group’s overall growth trajectory. Furthermore, the effective tax rate (ETR) is expected to decline gradually. This reduction will be supported by new tax incentives for the group’s Cambodian operations and its Gemas dairy farm once it achieves break-even, offsetting the expiry of Board of Investment (BOI) tax incentives for its Thai operations which had previously caused the ETR to rise to 29.6% in FY25.

The investment bank’s maintained “Buy” rating reflects conviction in the company’s strategic initiatives and long-term growth potential.