KUALA LUMPUR: Maybank Equities Research is maintaining its Buy on Fraser & Neave Holdings Bhd (F&N) at RM10.50 with a target price of RM13.25. The target price is based on 17.0 times CY11 PER.

Maybank Research said on Wednesday, Feb 10 after a record-setting 1QFY10, there could be more positive news flow into FY11 which might just surprise investors.

The same may be seen in FY12 despite the scheduled loss of its Coca-Cola contract. Maintain Buy and RM13.25 TP based on 17 times CY11 PER.

It said the RM78m 1QFY10 recurring net profit was 53% higher YoY and 11% higher QoQ – the highest quarterly F&N has ever recorded (previously RM61m in 3QFY09).

"This was 30% of our full-year forecast and 33% of consensus forecast. Operating profit from dairy
products nearly doubled YoY to RM41m, whilst soft drinks’ contributions rose by nearly a quarter to RM54m. These two core divisions contributed 84% of its 1QFY10 operating profit," it said.

Maybank Research said there are no changes to its forecasts at this juncture although F&N continues to deliver above-expectations net profit growth and annual dividends, in spite of challenging macro-economic conditions.

"Our 8% 2-year net profit CAGR expectation is good for a broad-based consumer stock, but dividend yield of 5.5-6% over the next two years is very decent. Our Buy call is also premised on potential value-enhancing exercise from the glass division," it said.