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Farm Fresh to ride on uptrending daily industry, well-positioned to expand presence locally, says Mercury Securities

According to Frost & Sullivan, the local dairy industry is set to grow at a five-year compound annual growth rate (CAGR) of 10 per cent, 8.0 per cent, and 7.0 per cent for the chilled RTD milk, ambient RTD milk, and yoghurt industry from 2020 to 2025.

KUALA LUMPUR: Farm Fresh Bhd is well-positioned to expand its presence locally on the backdrop of a growing Malaysian dairy industry, Mercury Securities Sdn Bhd said.

The research firm said Farm Fresh is one of the biggest and fastest growing players in Malaysia's dairy industry.

The company has a strong market presence across various dairy categories in Malaysia as of nine month 2021, commanding 42 per cent market share in chilled ready-to-drink (RTD) milk, 10 per cent in ambient RTD milk and 11 per cent in yoghurt.

"We like Farm Fresh for its strong market presence in Malaysia's dairy industry, local and regional expansion plans," it said in a note.

According to Frost & Sullivan, the local dairy industry is set to grow at a five-year compound annual growth rate (CAGR) of 10 per cent, 8.0 per cent, and 7.0 per cent for the chilled RTD milk, ambient RTD milk, and yoghurt industry from 2020 to 2025.

Mercury Securities said Farm Fresh plans to increase production capabilities in Australia through the expansion of the Kyabram Facility, which will allow the company to manufacture ultra-high-temperature (UHT)/ambient products to serve as an export hub to the Asia- Pacific region.

Expansion is expected to begin in the first half (1H) of 2022 and production expected to commence in the second quarter (Q2) of 2023.

Farm Fresh also seeks to expand its presence in Indonesia and the Philippines by establishing new production and distribution capabilities, which will increase total annual production capacity by approximately 20.8 million litres of finish products.

Mercury Securities said the RTD milk segment in Indonesia and Philippines is expected to grow at a five-year CAGR of 9.3 per cent and 6.5 per cent from 2020 to 2025.

Mercury Securities has a 'Subscribe' recommendation on Farm Fresh with a target price of RM1.53.

https://www.nst.com.my/business/2022/03/776434/farm-fresh-ride-uptrending-daily-industry-well-positioned-expand-presence

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