In a Tuesday report, analyst Soh Lin Sin says F&N’s dairies division continued to deliver strong growth, underpinned by strong Dairies Thailand performance, as well as the significant increase in contribution from Vinamilk.
With a 18.74% stake in Vinamilk and two representatives on Vinamilk’s board, Vinamilk has been reclassified as an associate company with effect from April.
In FY17, Vinamilk contributed $84 million or 47% of EBIT – $51 million as share of associates profit for the five-and-on-half-months for this financial year and $33 million as dividend income.
An exceptional gain of $1.18 billion was also recorded from the realisation of fair value adjustment reserve upon the reclassification of Vinamilk, boosting the FY17 PATMI to $1.28 billion.
Meanwhile, losses for F&N’s publishing and printing division narrowed to $4.5 million on improved printing plant efficiencies and cost rationalisation measures.
Still, F&N says it is committed to its dividend policy with a payout ratio of at least 50% of group attributable profit before fair value adjustment and exceptional items.
For FY17, it has declared total dividends of 4.5 cents, same as last year.
However, Soh says the Malaysian market remains challenging, hit by rising input costs, cautious spending, intensified competition, and weaker MYR against SGD.
On its outlook, the analyst is cautiously optimistic on the trading environment in Malaysia, Singapore and Thailand although the F&B markets have showed signs of improvement.
On the other hand, margin pressure in Malaysia should ease slightly, on the back of a more favourable sugar price.
As at 2.40pm, shares in F&N are down 1 cent at $2.63, or 25.2 times FY18 earnings.
