Published: Wednesday August 8, 2012 MYT 11:42:00 AM
AmResearch: F&N's long-term earnings growth remains intact
KUALA LUMPUR: Fraser & Neave Holdings Bhd's long-term earnings growth remains intact, well underpinned by higher demand for core soft drinks and dairies divisions, says AmResearch.
It said on Wednesday that contribution from F&N's mixed property development project in Petaling Jaya, which has a gross development value of RM1.3bil is expected to kick-in over the next few years.
AmResearch said that newsflow on a potential acquisition by interested parties is expected to provide support to share price in the meantime.
"We maintain our HOLD recommendation on F&N, with an unchanged discounted cashflow-based fair value of RM18.10 a share," it said.
The research house said F&N's nine-months FY12 net profit of RM200mil outperformed full-year consensus estimate of RM194mil, but accounted for only 68% of its FY12F forecast.
"Despite this, we maintain our FY12F-FY14F earnings forecasts, given a seasonally stronger 4Q. Earnings have historically been strongest at the beginning and end of its financial year due to festivities such as the Chinese New Year and Hari Raya Puasa," it said.
AmResearch said it expected Q4, FY12 core earnings to be also boosted by rising utilisation rates at its Thai diary plant.
It added that the group was also expected to recognise a deferred tax asset of RM21mil, in relation to the halal tax incentive granted to Pulau Indah, upon commencement of operations of the remaining production lines.