The drastic fall in Farm Fresh shares since last Friday is said to have been influenced by the announcement by Bega Group Australia earlier this week.
Earlier, Bega warned that it may face a non-cash impairment of between A$180 million and A$280 million due to a fall in milk production volumes and rising dairy prices.
This has sparked concerns over risks that may also affect Farm Fresh's production, prompting a sharp drop in its share price, according to the company in its filing to Bursa Malaysia.
However, in a voluntary statement, it explained that it was less affected than Bega Group despite the lower-than-expected drop in farmgate milk prices.
This is because the dairy company only buys about 14% of the total milk ingredients from third-party farmers in Australia.
He added that 70% of the raw milk used comes from his own farms in Malaysia and Australia.
Following the sharp drop in Farm Fresh shares, RHB Research lowered its rating on the company from 'buy' to 'neutral' with a target price (TP) of RM1.23 from RM1.72 previously.
At the time of writing, Farm Fresh shares remained trading gloomy with a drop of 3.5% to around RM1.10.
