PETALING JAYA: Kawan Food Bhd’s growth plans include introducing new products and penetrating into new export markets.
The group managed to penetrate into South America, a market which is expected to contribute positively in the fourth quarter of the financial year 2021 (Q4’FY21).
Demand for Kawan’s products will continue to be strong as the popularity of frozen food has increased, fuelled by the change in consumer consumption behaviour due to the Covid-19 pandemic, according to PublicInvest Research in its latest report.
Kawan Food had recently hosted a virtual investor briefing, said the research house adding that “we came away feeling reaffirmed on the group’s future prospects.’’
Some of the Kawan food products
Despite the disruption in production facilities, there were no order cancellations and Kawan Food has managed to capture an additional 3%-5% market share in the domestic market.
Kawan Food’s market share was about 60% before the pandemic.
While the manpower constraints had limited Kawan Food’s production for its new products such as Pizza, Malabar Roti, PublicInvest Research said the group managed to get new workers and is looking to gradually increase its headcount to 410 from about 300 going forward.
This should enable Kawan Food to ramp up its production for the new products given the positive response among local consumers.
Kawan Food has secure vaccines for its employees and resumed its production at full capacity on Aug 16.
The research house noted that the two- week closure from June 14 and workforce restrictions from stricter movement orders saw Kawan Food’s utilisation rate declined to 45%-55%.
“As a result, there has been a backlog in orders from both Kawan Food’s local and overseas customers. Going forward, given the strong order backlog and the robust demand from both local and overseas clients, we are expecting Kawan Food’s utilisation to rise to 60%-65%.’’ the research house said.
It has maintained an “outperform’’ call on the stock with an unchanged target price of RM2.75 a share.