Farm Fresh Berhad: Strong Earnings Growth and Strategic Expansion Signal Outperformance in Malaysia’s Food Sector

Farm Fresh Berhad (FFB) has emerged as a standout performer in Malaysia’s food sector, driven by a combination of robust financial results, strategic product diversification, and aggressive international expansion. For the first quarter of FY2026 (ended June 30, 2025), the company reported a record net profit of RM32.8 million, a 26% year-on-year increase, and a gross profit margin expansion to 33.2% from 30.2% [1]. These metrics underscore FFB’s ability to outpace industry forecasts, even as it navigates a competitive dairy and plant-based market.

Margin Expansion and Cost Efficiency

FFB’s margin improvements stem from a dual strategy: shifting toward higher-margin products and leveraging lower dairy raw material costs. The company’s gross profit surged 18.6% to RM86.5 million in Q1FY2026, with profit after tax (PAT) rising 25.4% to RM33.2 million [2]. Analysts attribute this to the successful launch of premium offerings like children’s milk, chocolate malt, and full cream milk powder, which command higher prices while aligning with consumer demand for nutrition-focused products [3]. Additionally, reduced dairy input costs in Malaysia—driven by favorable global supply dynamics—have amplified profitability [1].

Product Innovation and SKU Diversification

FFB’s product portfolio has expanded to over 200 SKUs, including plant-based milk and high-protein variants, positioning it as a one-stop shop for diverse dietary preferences [4]. This diversification has not only broadened its customer base but also insulated the company from sector-specific volatility. For instance, the acquisition of ice cream brands The Inside Scoop and Sin Wah added RM100 million in annual revenue and boosted ice cream margins from 7.8% to 11% [4]. The company’s recent launch of cultured milk and butter further demonstrates its commitment to value-added products, which contribute to recurring revenue streams.

International Expansion and Market Capture

FFB’s regional ambitions are accelerating. It has initiated dairy exports to Cambodia and launched operations in the Philippines in September 2024, with plans to establish a farm and factory in Indonesia [3]. These moves are critical for tapping into ASEAN’s growing middle class and its appetite for premium dairy products. Domestically, FFB is doubling its freezer network to 20,000 units by 2028, targeting Malaysia’s RM1.3 billion ice cream market [4]. A new 1 million-piece-per-day ice cream production hub in Enstek, slated for 2026, will further consolidate its leadership in the frozen food segment [2].

Analyst Outlook and Long-Term Potential

Financial analysts have upgraded FFB to a “Buy” rating, citing its disciplined margin management and scalable growth model. With a trailing P/E ratio of 31.98 and a price target of RM1.20, the stock is seen as undervalued relative to its earnings trajectory [1]. The company’s FY2025 net profit surged 67.5% to RM106.39 million, driven by ice cream acquisitions and operational synergies [2]. Looking ahead, FFB’s focus on expanding its Horeca (hotel, restaurant, and café) segment—serving over 10 hotel chains and 14 café chains—adds another layer of recurring revenue [3].

Conclusion

Farm Fresh Berhad’s strategic trifecta of margin optimization, product innovation, and international expansion positions it as a high-conviction growth play in the ASEAN food sector. By capitalizing on Malaysia’s dairy renaissance and the global shift toward plant-based alternatives, FFB is not only outpacing industry benchmarks but also building a durable competitive moat. For investors seeking exposure to a company with both near-term profitability and long-term scalability, FFB’s current trajectory offers compelling upside.

Source:
[1] Farm Fresh stays upbeat after record 1Q profit as..., [https://theedgemalaysia.com/node/768438]
[2] Farm Fresh Delivers Solid Q1 With PAT Jumping 25% To RM33 Million, [https://www.businesstoday.com.my/2025/08/27/farm-fresh-delivers-solid-q1-with-pat-jumping-25-to-rm33-million/]
[3] Farm Fresh Berhad (FFB) is Expanding on All Fronts, [https://klse1.i3investor.com/web/blog/detail/Chloe_Tai_Blog/2025-08-27-story-h499722456-Farm_Fresh_Berhad_FFB_is_Expanding_on_All_Fronts]
[4] Farm Fresh Berhad: A High-Growth Play in a Shifting Dairy..., [https://www.ainvest.com/news/farm-fresh-berhad-high-growth-play-shifting-dairy-plant-based-landscape-2508/]