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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Skyworld Development Berhad, listed on the main board on 10/7, is a real estate group with KL Center as a development zone. It mainly develops affordable and mid-class properties. From 2014 to now, 7 projects have been completed, with a total development value of more than 3b. The subscription rate for each project is as high as 90%. The order value up to the time of listing is 968b. It can be seen that the profit has been over 3 quarters
In addition, the Group has also won many awards over the past few years, such as Asia Pacific Real Estate Awards, BCI Asia Awards, Malaysia Kincentric Employers Awards, and Global Construction Excellence Awards. After the 2023Q4 results were announced, the annual turnover and net profit set record highs. The Group expects the value of new projects launched in FY2024 to exceed 1b, which means it will continue to grow
Although it has strong fundamentals, is lower than the valuation level of peers, and an initial 4% dividend rate advantage, it is unable to attract investors to enter the market. The situation is very similar to that of Radium, which went public a few days ago
Investors would rather leave at a loss of money than hold on
According to my observations, the only phenomenon that can be explained at the moment is the lack of capital in the market. Foreign capital has continued to leave the horse stock market for the past two months, and the support from local institutions and retail investors is also quite limited. Coupled with the drag of the continued economic slowdown, I don't think real estate is yet everyone's preferred field, so it's not that the group's value isn't in place, but it's a question of timing
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