Farm Fresh Berhad

[winston]

not vested

Farm Fresh (FFB MK)
Malaysia’s Largest Dairy Producer

Farm Fresh, Malaysia’s dairy darling, offers a compelling three-year earnings CAGR of
16.9% in FY21-24, which is unrivalled among local large-cap consumer peers.

Robust organic growth (up to 10.0%) is further supported by untapped segments and export markets.

We like Farm Fresh for its notable operational execution and ample growth opportunities.

Initiate coverage with BUY and a conservative target price of RM1.60 with a potential blue sky target price of RM2.00.

Source: UOBKH

https://research.uobkayhian.com/content ... ba3494bbb5

[winston]

not vested

June 8, 2023

Time to reflect

We retain our Hold call on Farm Fresh (FFB) with a reduced target price of RM1.37 (previously RM1.60) following a review of our estimates.

Margin repair in 2QFY24F should offer valuation support but a clear trajectory back to higher ROEs will, in our view, be key to a significant rerating.

Valuations reset to GGM model (prev. 28x CY24F P/E) to better reflect future profitability – 16.0% ROE, 8.5% COE, 5% LT. growth.

Management expects raw milk prices, which jumped 31% in FY23, to ease 14% yoy when the fixing of farmgate prices occurs in Jul 23. This, together with a 5% price increase from 1 Jul 23 will, by our estimates, take gross margins back to 26.1% in FY24F. T

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... AB9413726F

[winston]

not vested

May 31, 2023

4QFY23 results: Fell short
Stay on the sidelines; D/G to HOLD

FFB’s 4QFY23 results disappointed. Sequential earnings may still be impacted by high milk inventory costs until its price hikes come into effect

in Jul 2023, and input costs begin to ease from 3QFY24 onwards. We cut FY24E earnings by 21% but leave FY25E unchanged and introduce FY26E.

With near-term challenges, we D/G FFB to HOLD with a lower MYR1.60 TP, based on an updated Malaysia dairy-related CY24E sector avg. PER of 26x

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/322202.pdf

[winston]

not vested

Farm Fresh hits record low for third consecutive day

By Hailey Chung

According to Bloomberg, there are four “buy” calls and five “hold” calls on Farm Fresh, with target prices ranging from RM1.37 to RM2.04.

Farm Fresh logged its weakest quarterly financial performance in the fourth quarter ended March 31, 2023 (4QFY2023) as its net profit fell 72.4% year-on-year and 74% quarter-on-quarter to RM4.9 million. This was on the back of higher revenue of RM161.36 million from RM128.07 million a year ago.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/673524

[winston]

not vested

OTHERS FARM FRESH BERHAD - Unusual Market Activity
FARM FRESH BERHAD

This announcement is made with reference to the unusual market activity and rumours circulating on Farm Fresh Berhad, drawing on the recent announcement by Bega Group (ASX: BGA) on the decline in Australian milk production resulting in intense competition for raw milk, leading to Bega Group expecting a decline in performance and an expected non-cash impairment in the range of AUD180m to AUD280m in its audited results (subject to finalisation).

While Farm Fresh Berhad is also impacted by the less then expected decrease in farmgate milk prices in Australia as we do purchase milk from third party farmers in Australia, we are much less impacted compared to Bega Group.

Bega Group exclusively purchases 100% of its milk requirements from farmers in Australia whilst our purchase of milk ingredients from third party farmers in Australia is expected to account for approximately 14% of our total milk ingredients of equivalent to more than 100 million litres in the financial year ended 31 March 2024.

Additionally, 70% of the raw milk used by us comes from our own farms in both Malaysia and Australia.

https://www.bursamalaysia.com/market_in ... id=3367053

[winston]

not vested

Abrdn emerges as Farm Fresh’s fifth largest shareholder after big drop in share price

By Syafiqah Salim

Purchase of 93.84 million shares or a 5.013% stake

Closing price of RM1.19 on Aug 10, the share purchases would have cost Abrdn RM111.67 million.

Farm Fresh's share price hit an all-time of low RM1.05 on July 12 amid supply concerns then triggered by news that Australia-listed Bega Group warned that it could be facing a non-cash impairment of between A$180 million (RM559.5 million) and A$280 million due to a decline in milk production volumes and rising dairy ingredient prices.

Farm Fresh, however, explained that its exposure to falling milk production is not large in Australia. The company estimates that roughly 14% of its milk ingredients will be sourced from third-party farmers in Australia.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/678807

[winston]

not vested

Farm Fresh targets regional growth, new products

“In the Philippines, our factory at San Simon is expected to be completed and commence operations in September 2023.

Additionally, Farm Fresh said it has plans to introduce growing-up milk powder and embark on the sales of consumer packaged goods (CPG) ice cream by end-2023, further diversifying its product portfolio and capturing new opportunities for growth.

Farm Fresh acquired a 65% stake in ice cream company, Inside Scoop, earlier this year.

Farm Fresh planned to launch one new Inside Scoop outlet a month, which would result in the ice cream company doubling its outlet count in three years.

Concurrently, Loi said Farm Fresh has commenced investments in a CPG ice cream line at Inside Scoop’s existing plant in Ara Damansara.

Additionally, Loi said the group’s acquisition of a 90% stake in Melbourne, Australia-based premium dairy company, St David Dairy, will provide Farm Fresh with access to the brand’s well-established client base.

“This includes Melbourne’s leading cafes, restaurants and retailers, along with their range of award winning fresh milk and cultured butter.

He emphasised that the acquisition has opened up a new avenue for Farm Fresh to begin producing premium cultured butter to be exported to various markets in the Asia-Pacific region.

Source: The Star

https://www.thestar.com.my/business/bus ... w-products

[winston]

vested

Jul 20, 2023

A tale of two halves
TP lowered to MYR1.20, maintain HOLD

Cost challenges are expected to persist in the near term but stable product demand, product price hikes and softening raw material costs in 2HFY24 should drive stronger earnings HoH.

We lower FY24E-FY25E earnings estimates by 11%-21% but leave FY26E unchanged.

Pegging the stock to the consumer sector CY24 PER of 24x, our TP is revised to MYR1.20
(-40sen, vs. 26x CY24E previously).

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/329295.pdf

[winston]

vested

June 8, 2023

Time to reflect

We retain our Hold call on Farm Fresh (FFB) with a reduced target price of RM1.37 (previously RM1.60) following a review of our estimates.

Margin repair in 2QFY24F should offer valuation support but a clear trajectory back to higher ROEs will, in our view, be key to a significant rerating.

Valuations reset to GGM model (prev. 28x CY24F P/E) to better reflect future profitability – 16.0% ROE, 8.5% COE, 5% LT. growth.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... AB9413726F

[winston]

not vested

Farm Fresh’s 1Q earnings fall 58% as high raw material, borrowing costs erode profitability

By Chester Tay

Farm Fresh Bhd’s net profit for the first quarter ended June 30, 2023 (1QFY2024) dropped 58% year-on-year amid escalating costs of dairy raw materials, coupled with higher finance cost and marketing spend on new product launches.

Net profit fell to RM6.37 million or 0.34 sen per share for 1QFY2024, from RM15.24 million or 0.82 sen per share a year ago, according to the group’s stock exchange filing on Wednesday.

Revenue for 1QFY2024, however, grew 29% to RM185.46 million from RM144.02 million a year ago.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/680766