Australia's largest farm milk company, Bega Cheese, announced a few days ago that due to continued decline in production, the company must make provision deductions of 180 to 280 million yuan in advance. At the same time, it is expected that milk prices will rise again in FY2024
After the news was announced, the company's stock price reportedly fell, even falling below a new low in 10 years
The impact also extended to the Malaysian stock market. Farm Fresh, which claims to be Malaysia's number one fresh milk brand, once fell below a new low in listing on 4/7, and even entered the ranks of fairy stocks. In addition, the main competitor, DLady, is also pulling back one after another. The decline has far exceeded 10 new lows, facing the same experience as Bega Cheese
In fact, there is far more than one factor dragging down these two companies. Judging from the latest quarterly performance, Farm Fresh and Dlady both experienced large declines in net profit, including the impact of rising labor, processing, and electricity costs.
In addition to the fact that the market has high expectations for Farm Fresh itself, the valuation level will naturally also be very high. Once any changes occur, such as poor performance or this incident, the impact on investors will definitely be deeper
Therefore, the current pullback is only an initial reflection; the next key is to return to when the FFB can get rid of the effects of cost and supply issues. The streets are full of companies with higher valuations and lower dividend rates than banks. If you want to see them as a reference for value deployment, I'm sure you have better options
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