KUALA LUMPUR, Nov 8 — MIDF Research has maintained its ‘trading buy’ call on Fraser and Neave Holdings Bhd (F&N) with an unchanged target price (TP) of RM33.07 after the company shared its outlook for financial year 2022 (FY22).
The food and beverage (F&B) company is expected to maintain its strategy that focuses on exports for both F&B Malaysia and Thailand as a hedge against financial disruption caused by Covid-19.
“Hence, we are optimistic about F&N and maintain our earnings estimate,” MIDF Research said in a note today.
Besides its outlook, F&N has also updated that its integrated warehouse and solar farmhouse are now near completion, supporting MIDF’s positive call on the group.
It said two of its four ongoing projects are going to be completed at end of calender year 2021 (CY21) and the rest at first quarter of calender year 2022 (1QCY22).
The new integrated warehouse located in Shah Alam with automatic storage and retrieval system with capacity of more than 50,000 pallets would reduce fuel usage, shorten delivery lead time to customers and reduce operational costs.
Meanwhile, F&N’s new Solar Photovoltaic (PV) system is projected to save annual electricity cost by between RM3 million and RM4 million.
“However, risks to our call include higher than expected tax from Cukai Makmur (prosperity tax) and high foreign-sourced income corporate tax,” MIDF said.
MIDF said Cukai Makmur implementation on F&N is still pending clarification.
The firm noted that Cukai Makmur computation is at entity level, not group level; and F&B Holdings Bhd has a few legal entities which not a single one has taxable income of more than RM100 million.
“However, a plausible concern is regarding the removal of corporate tax exemptions for foreign-sourced income. As at now, F&B Thailand operating profit stands at 81.3 per cent of the total operating profit,” it said.
As at 11.08am, F&N fell 0.62 sen to RM26.68, with 27,000 shares traded. — Bernama
