April 23, 2025

Malaysia-based F&N's move into upstream dairy operations expected to drive growth in dairy sector

Fraser & Neave Holdings Bhd's (F&N) strategic shift into upstream dairy operations is expected to significantly enhance the Malaysia-based company's growth prospects within the dairy sector, according to Kenanga Research.

The company recently received its first commercial batch of 2,500 Chilean Holstein dairy heifers at its integrated dairy farm located in Gemas, Negeri Sembilan, Malaysia. This milestone comes after a delay due to an import suspension from the United States. This marks the largest single importation of breeding cattle into Malaysia and the country's first from Chile.

"F&N had initially targeted to source the herd from the US, though that plan was later revised," the company said in a note. "The pivot to Chile removed the overhang from prolonged delays, and we now expect first milk production to commence in mid-2025 (previously Jan 2025)."

While short-term earnings will take a modest hit from initial costs, especially with higher depreciation, the firm said that the pivot by F&N will enhance its longer-term growth prospects in the dairy industry.

The firm cut its earnings forecast for F&N by 2% for financial year 2026 to account for depreciation and operating expenses associated with the dairy farm.

- New Straits Times