CGS-CIMB upgrades Kawan Food, raises target price to RM2

KUALA LUMPUR (May 29): CGS-CIMB Research has upgraded Kawan Food Bhd to “Add” at RM1.70 with a higher target price (TP) of RM2 (from RM1.41) and said it deemed Kawan’s 1Q20 core net profit of RM4.8 million to be above expectations from higher-than-expected domestic sales and better cost efficiencies.

In a note May 28, the research house said it expects export and local demand for Kawan’s frozen products to remain high, on the back of increased consumer demand for home consumption.

“We upgrade Kawan Food to Add due to: i) defensive global demand for frozen food, ii) strong brand name in the frozen bread market globally and iii) strong balance sheet with a net cash position of RM32.8 million (as at end-1Q20).

“Upgrade to Add, with a higher TP of RM2.00 (23.2x CY21 P/E),” it said.