“We forecast MFM’s net profit to improve by 293.8% in FY19 and 16.9% in FY20 as operations normalise and contribution from the new poultry and aqua feed plants come in,” said AmInvestment Bank in its initiation report on the company
PETALING JAYA: Malayan Flour Mills Bhd (MFM) is expected to be one of the largest integrated poultry players in Malaysia by 2020, upon the completion of its poultry processing plant in Lumut during the third quarter of 2019.
According to AmInvestment Bank, MFM’s earnings growth and operating profit margin should be sustained in the long-term.
With an installed production capacity of 240,000 of chickens per day, MFM would entrench its position as the biggest producer of broilers in the country.
The group will be involved in almost every segment of the value chain from the rearing of day-old chicks to the production of broilers.
“After a weak financial year 2018 (FY18), MFM’s earnings are expected to recover in FY19.
“We forecast MFM’s net profit to improve by 293.8% in FY19 and 16.9% in FY20 as operations normalise and contribution from the new poultry and aqua feed plants come in,” said AmInvestment Bank in its initiation report on the company.In FY18, the group’s poultry division was hit by a disease and decline in selling prices of live birds.
Additionally, its flour division was affected by high wheat costs in Malaysia. The research house said MFM’s balance sheet is expected to be cleaner after the RM220mil rights and RCULS issuance.
“We forecast net gearing to decline to 88.6% as at end-Dec 2019 from 116.7% as at end-Dec 2018.
“MFM’s fully diluted price-earnings ratio (PE) of 12 times for FY19 and 10.3 times for FY20 are undemanding.”