Farm Fresh Bhd's ability to leverage its strong brand and capitalise on favourable market conditions, including easing raw material prices and a stronger ringgit, leads to RHB Investment Bank Bhd (RHB Research) maintaining a BUY call on the company with an updated target price of RM2.11.

RHB Research's optimistic view on the company is further strengthened as Farm Fresh's in-house consumer-packaged goods (CPG) ice cream brand, Cream Hauz, received positive receptions. Farm Fresh mentioned that it aims to capture a 5% market share in the CPG ice cream segment, valued at over RM1.2 billion, by 2025.

Beyond the ice cream segment, Farm Fresh has its sights set on the lucrative chocolate malt beverage market, valued at RM1 billion. The company recently introduced a powder variant in July, with plans to roll out ready-to-drink options by 2025.

Additionally, Farm Fresh will soon expand its butter offerings to the hotel, restaurant and café segment, further boosting sales in this rapidly growing area, which now accounts for around 30% of the company's total revenue.

Farm Fresh has also been actively expanding its operations overseas. Production has commenced in the Philippines, after building brand presence through imports, marking a key milestone in its regional growth strategy.

The company's gross profit margins have remained robust, staying above 30% for the past three quarters. With lower prices for whole milk powder and raw milk expected to be reflected in upcoming quarters, Farm Fresh is poised to see further margin expansion.

The research house believes that the stronger ringgit will also help reduce sourcing costs, as over 40% of Farm Fresh's cost of goods sold comes from imported materials.

RHB Research has raised its earnings forecast for Farm Fresh by 5% for the financial year of 2026 (FY26) and FY27, reflecting the company's cost management and a stronger currency.