CGS-CIMB Securities Sdn Bhd is forecasting an 11.3% year-on-year (y-o-y) growth in net profit for F&N for the financial year 2023 (FY2023), driven by an influx of tourists and a strengthening of the baht by 0.3% against the ringgit.

It also cited lower freight costs as a factor that should help F&N’s competitiveness in export markets. “We expect a gradual decline in input costs from the fourth quarter of FY2022 (Q4 2022) to drive margin expansion for F&N,” CGS-CIMB said.

In Q1 2023, F&N’s core net profit came in at RM104.6 million, dipping by 11.4% y-o-y after excluding one-off gains of RM94.2 million.

On a quarter-on-quarter basis, F&N’s Q1 2023 revenue and core net profit rose 7.1% and 7.4%, respectively, thanks to higher export sales, a rise in domestic sales in Malaysia from Chinese New Year festivities, and a maiden contribution from Cocoaland.

As such, CGS-CIMB has reiterated its “add” call on F&N with a higher target price (TP) of RM28.30.

MIDF Research also maintained its “buy” recommendation on F&N with a higher TP of RM33.50 as the research firm is optimistic about the company’s outlook, backed by the increase in out-of-home consumption, benefitting from the return of international tourists to Malaysia and Thailand after the reopening of borders.

It said the additional revenue from the integration of Cocoaland and transformation of Ladang Permai Damai into an integrated dairy farm and crop plantation, declining global commodity prices, and normalising export sales to China after the reopening of China’s border would also boost the group’s performance.

“However, key downside risks which can affect F&N are raw material shortage and a sharp increase in commodity prices which could have an impact on the cost and profitability of its product,” it said.

At 11.26am, F&N added 88 sen to RM25.88 with 72,900 shares traded.