Farm Fresh Bhd has received a BUY recommendation from both RHB Investment Bank Bhd (RHB Research) and Maybank Investment Bank Bhd (Maybank IB), with target prices of RM2.11 and RM2.05, respectively. Both research houses are optimistic about the company's strong growth trajectory, driven by robust sales and solid margins.
RHB Research maintains a BUY call with a target price of RM2.11, representing a 17% upside. Analyst Soong Wei Siang noted that Farm Fresh's first half of FY25 results met expectations, with a core net profit of RM53 million, a 169% year-on-year increase. RHB expects continued sales growth, particularly from its premium products such as ice cream and chocolate malt, and is optimistic about the company's ability to sustain its positive margin trajectory, buoyed by lower input costs and a growing market share in the dairy sector. The brokerage is confident that Farm Fresh's established brand equity and expansion plans will continue to drive earnings growth in the second half of FY25.
Meanwhile, Maybank IB also maintains a BUY recommendation for Farm Fresh, with a target price of RM2.05. The bank believes the company is on track to deliver consistent earnings in the second half of FY25, backed by stable domestic liquid milk demand, increasing contributions from new products, and stable input costs. For the second quarter of FY25, Farm Fresh posted a 107% year-on-year increase in core net profit to RM26 million, with 1HFY25 core net profit rising 205% year-on-year. Maybank highlighted that the company's gross profit margin benefitted from lower milk costs, particularly in its commercial ultra-high temperature (UHT) product category and new ice cream products.
Both analysts agree that while the outlook remains positive, there are risks, particularly from potential input cost increases and delays in expansion plans. Despite these concerns, Farm Fresh's solid market presence, new product launches, and international expansion efforts, such as its production unit in the Philippines, have positioned it well for continued growth.
