KUALA LUMPUR: Fraser & Neave Holdings Bhd's (F&N) earnings recovery could be well underway in the post-lockdown period, Kenanga Research said.
This was expected to be further supported by F&N's continuous product innovations, the firm added.
"We believe that earnings should gradually recover moving forward, following the relaxation of movement restrictions in both Malaysia and Thailand.
"Moreover, the anticipated earnings recovery should be further supported by the group's continuous product innovations, with recent new launches including "teh tarik" beverages namely F&N Teh Tarik Ori and F&N Teh Tarik Less Sweet variants in Malaysia, coupled with Magnolia Milkies (milk tablets made from 100 per cent New Zealand milk) and limited-edition mango-flavoured sweetened condensed milk in Thailand," Kenanga Research said in a report today.
The firm, however, maintained its earnings forecast on F&N following its latest nine-months financial year 2020 (9MFY20) results.
Kenanga Research said at 80 per cent of its full-year estimate, the nine-month earnings of RM324.4 million was within expectation with the coming fourth quarter (Q4) a seasonally weaker quarter and the absence of dividend was also in line.
While F&N had a setback on the failed acquisition of MSM's Ladang Chuping land, Kenanga Research is nonetheless positive on the company's intention to continue pursuing a dairy farm plan.
"The current weak economic environment may work well to its advantage as there may be other more attractively-priced land offers.
The firm maintained its "outperform" call rating on F&N with an unchanged target price of RM36.20.
"We deem our valuations to be fair, premised on its sturdy fundamentals and resiliency which could provide some degree of comfort under the current market uncertainty, coupled with premium valuations attached to large-cap F&B stocks in lieu of their earnings defensiveness.
"Yet, dividend could be a slight dampener with the anticipated low yield of about two per cent," it added.