Stock With Momentum: Farm's Best

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This article first appeared in The Edge Financial Daily, on January 22, 2016.


Farm's Best Bhd (+ve)

Shares of integrated poultry producer Farm’s Best (Fundamental: 0.35/3, Valuation: 0.9/3) rose 0.7% to close at 72 sen yesterday, on active trade.

The company’s main operations (FY2014: 94.2% of revenue) include manufacturing and wholesaling animal feeds, poultry breeding, hatchery operations, contract farming, poultry processing, and trading of feeds, day-old chicks, medications and vaccines.

For 9M2015, Farm’s Best posted a net loss of RM6.4 million, compared to a net profit of RM2.0 million a year ago.

Revenue was also 18.0% lower y-o-y at RM265.9 million. The decline was mainly due to lower average selling price and lower sales volume of live broilers. Recall, also, that the company ceased its egg layer division in April 2015.

At end-September, the company had net debt of RM181.3 million — a net gearing of 204.3% — with an interest cover ratio of 1.36 times. Finance costs amounted to some RM14.4 million for 9M2015.