Fan Milk PLC Ratings Upgrade & Q1-2026 Earnings Insights
INSIGHT BRIEF
Topline re-powered for long term growth
We upgrade our rating of Fan Milk PLC (“FML” or “the company”) to “BUY” with a 12-month target price of GHS16.19/share (+28% upside potential) on the back of sustained topline momentum which brightens our outlook of the ice cream manufacturer. Notably the company’s aggressive sales campaigns across indoor and outdoor channels have yielded results in the past quarters with signs of sustained rebound. Also, the return to dividend payment has improved investor sentiments and pricing of the stock remarkably.
Investment rationale
In our view, Fan Milk has emerged from a turbulent restructuring period and is now positioned for consistent growth underpinned by a stronger operating model, robust cash flows, and improving shareholder returns. The key catalysts include volume expansion in affordable dairy & plant-based products, continued cost rationalization, and a return to dividend payment. Our investment case is backed by:
- Elevated tailwinds for revenue growth on the back of improved company specific fundamentals and steady disinflation
- Stable margins influenced by both revenue growth and calm cost pressures on the back of reduced macroeconomic volatility
- Improved asset quality aided by efficient utilization is expected to generate sufficient cashflow to fund operations and drive organic growth
- Lower debt burden is expected to unlock higher cashflows to equity investors
Analysis of Latest Financial Results (Q1‑2026) — GHS’000
| Metric | Q1‑2025A | Q4‑2025A | Q1‑2026A | Y/Y | Q/Q | Q1‑2026E | Variance |
|---|---|---|---|---|---|---|---|
| Revenue | 242,184 | 274,050 | 321,641 | 33% | 17% | 278,512 | 15% |
| COGS | 151,469 | 142,533 | 171,370 | 13% | 20% | 175,462 | -2% |
| Gross profit | 90,715 | 131,517 | 150,271 | 66% | 14% | 103,049 | 46% |
| Operating expense | 60,318 | 93,973 | 90,762 | 50% | -3% | 93,973 | -3% |
| Operating profit | 31,090 | 53,246 | 59,635 | 92% | 12% | 53,246 | 12% |
| Pre‑tax profit | 33,244 | 40,518 | 61,157 | 84% | 51% | 35,928 | 70% |
| Tax expense | 9,142 | 15,494 | 33,538 | 267% | 116% | 15,494 | 116% |
| Net profit | 24,102 | 25,024 | 27,619 | 15% | 10% | 25,024 | 10% |
| EPS (GHS/share) | 0.21 | 0.22 | 0.24 | 15% | 10% | 0.22 | 10% |