KUALA LUMPUR: Fraser & Neave Holdings Bhd's first quarter (Q1) net profit of RM93 million came within expectations, making up 23 per cent of full-year estimates, Kenanga Research said.
The firm said this was due to strong showing from F&N's Thai food and beverage (F&B) as Malaysian operation was disrupted by the December 2021 floods.
"As expected, F&N saw a robust top-line performance especially its Thai operation on account of the reopening of the economy and incoming festivities.
"Malaysian operation was affected by the December floods which disrupted domestic and export sales.
"Nevertheless, with the reopening of the economy and incoming festivities, we expect sales to continue to be robust in the coming quarters, but downside pressure on margins looks to persists for the remainder of the financial year 2022," it said.
Based on the easing of restrictions coupled with incoming festivities and pent-up demand, Kenanga Research expects robust and sustained earnings ahead.
F&N's investment into the Sri Nona Group has proven its worth in the 2021 festive season which is likely to continue in the coming festivities.
"Sri Nona is providing the platform to venture into the halal food segments, and more product offerings and also likely to expand its halal exports in Middle East and North Africa region and Asean.
"Despite the prevalent headwinds, the encouraging momentum of recovery of economic activities will continue to drive sales for year ahead, particularly for beverages and ready-to-drink business, out-of-home and hotel, restaurant and cafe (HORECA) channels."
Kenanga Research added that rising input costs was the only dampening factor with leading indicators showing input prices looking only to recede in the second half of 2022.
Kenanga Research has maintained its "Outperform" call on F&N, with a higher target price of RM34.25 from RM32.45 previously.