Fraser & Neave Holdings Bhd (F&N) is positioned for a recovery in earnings in financial year 2027 (FY27) despite recent operational challenges, according to industry analysts. The company has seen improvements in its dairy segment and continues to navigate disruptions related to the Cambodia-Thailand border conflict, supporting an optimistic outlook for its financial performance.
Research from UOB Kay Hian (UOBKH) indicated that yields in F&N’s dairy operations have increased, with milk production rising to approximately 30 litres per cow per day from around 25 litres in the third quarter of FY26. The company currently maintains a milking herd exceeding 3,000 cows, with plans to expand to 10,000 cows by 2029 remaining on track. The initial herd replenishment has contributed to improved production, and yields are expected to strengthen further in subsequent lactations.
Market share gains in F&N’s ultra-high temperature (UHT) milk segment were also noted. Share improved from about 1-2% previously to around 5-6%, reflecting the company’s strategic focus on growing the UHT category rather than aggressively pursuing market dominance. Future growth is anticipated to come from diversification into higher-value products, including chilled milk and yoghurt, once the UHT business stabilizes.
UOBKH emphasized that F&N is prioritizing operational optimization within its dairy division, seeking to maximize productivity from existing farms. Expansion plans may be deferred until the team enhances its expertise and farm operations mature sufficiently, after which more aggressive scaling—such as importing additional heifers—could resume.
Geopolitical tensions at the Cambodia-Thailand border have impacted F&N’s exports to Thailand, but the company's Cambodian operations have remained resilient. Following the conflict escalation, F&N began exporting key brands like Bear Brand from Malaysia. Despite potential for consumer pushback, sales of Malaysian-exported products have gained traction in Cambodia, with negative sentiment appearing more directed at Thai imports than the brands themselves. Domestic sales in Thailand have also shown steady growth during the third quarter of FY26.
F&N’s manufacturing facility in Cambodia is advancing progress toward local production of flagship products, with the launch of a new brand planned in the near future. The company is also considering expanding its Pulau Indah plant in Malaysia to bolster export capacity. However, increased logistics costs have narrowed profit margins on Malaysian exports to Cambodia, despite sustained demand.
UOBKH Research maintained a “buy” rating on F&N shares but revised its target price downward to RM36 from RM38.70, reflecting a cautious yet positive view of the company’s medium-term growth prospects.