$KAWAN / 7216 (KAWAN FOOD BERHAD)
Research by Public
Outperform - TP RM2.30

"Lifted by Export Sales"

Kawan Food Bhd (Kawan) reported a 47.5% YoY growth in 2QFY24 net profit to RM8.4m, primarily driven by heightened export demand especially from the Europe and North America markets. After adjusting for non-core items, Kawan’s 2QFY24 core net profit came in at RM9.0m. 1HFY24 core net profit of RM18.4m was in-line with our and consensus estimates, accounting for 49% and 51% of full-year estimates, respectively. We continue to expect frozen food demand to remain resilient as it generally offers greater convenience and a more affordable option as compared to dining out amid higher cost of living. We find Kawan’s valuation attractive, as it is currently trading at 16x, which is close to -1SD of its 3-year average forward PE. Therefore, we maintain our Outperform call on Kawan, with a lower TP of RM2.30 based on a lower PE multiple of 18x (close to 3-year average forward PE) pegged to FY25F EPS.

Analyst:
Wong Ling Ling
wong.lingling@publicinvestbank.com.my