MIDF keeps ‘sell’ call on F&N
KUALA LUMPUR: MIDF Research has maintained a “sell” call on Fraser & Neave Holdings Bhd (F&N) as it thinks the food and beverage (F&B) company is overvalued in comparison to the twoyear historical price-earnings ratio of 26.7 times.
In its note to investors yesterday, MIDF Research said F&N’s RM104.5 million third-quarter earnings showed a 50.6 per cent improvement from a year ago.
The company’s nine-month earnings grew marginally by one per cent to RM303.9 million.
The results were within MIDF Research’s expectations.
It said F&N’s initiatives in operational cost-savings, lower overheads and cheaper sugar price were partly offset by costlier milk imports, packaging expenses and higher advertising bills during the festive season.
The F&B company saw lower sales growth prior to the implementation of Goods and Services Tax, as dealers and distributers destocked inventory levels.
With the implementation of the new Sales and Services Tax effective September 1, MIDF Research said the activity would recur in the fourth quarter.
The research firm added that due to the recent price rally to RM37.48 a share, F&N’s current price-earnings ratio was now more than 40 times while dividend yield had dropped to about two per cent.