MIDF Research said it forecasts solid revenue and earnings for QL Resources’ livestock business.
PETALING JAYA: Analysts are largely bullish about the prospects of QL Resources Bhd
, underpinned by the group’s positive outlook on its respective business divisions.
Aside from its integrated livestock-segment, the group is also involved in the production of marine products, convenience stores by way of the Family Mart chain, as well as palm oil and clean energy.
MIDF Research said it forecasts solid revenue and earnings for QL Resources’ livestock business, adding that it will likely remain the group’s largest revenue contributor at 51.1% for the financial year ending March 2025 (FY25).
“This is expected to be driven by stable sales and margins for raw-material trading, sustainable egg production due to lower feed costs in Vietnam and Malaysia, ongoing egg subsidies in Malaysia, better egg prices and demand in Indonesia, as well as improving prices for day-old chicks and broiler chicken in Indonesia,” said the research house.
At the same time, Maybank Investment Bank Research (Maybank IB) Research is upbeat about the earnings outlook for QL Resources’ marine-product segment, despite recognising downward pressure on average selling prices for surimi and fishmeal from heightened global competition.
In a note released yesterday, the research house said sales volumes and margin accretion are expected to materialise from the newly commissioned surimi-processing plant in Indonesia, which was completed in April, along with lower input costs.
Switching its focus on to QL Resources’ livestock segment, the research house said no updates have been announced on when the control of egg prices will be lifted.
“However, once egg prices are freely floated, QL Resources may be able to minimise the margin impact from the absence of the government’s egg subsidies with easing corn and soybean prices while the market moves towards a new demand-supply equilibrium,” it said.
Meanwhile, TA Research said QL Resources’ management indicated that the rationalisation of egg subsidies is likely to occur in the second half of FY25, following the removal of fuel subsidies.
“With the stabilisation of global commodity prices, we expect margins to normalise in the first quarter of FY25 with relatively stable demand and prices.
“In FY25, the group’s Indonesian operations aim to break even, driven by a recovery from sluggish demand in FY24 and improved chick and broiler prices.
“However, the outlook for Vietnam remains challenging due to weaker consumer sentiment.”
The research house added, QL Resources is planning to focus more on clean energy as well as engineering, procurement and construction in the water business as part of its sustainable growth strategy.
TA Research said the group intends to divest its remaining palm oil assets gradually and shift its focus to clean energy in the form of biomass and solar energy.
“The outlook for the energy segment remains positive, driven by its renewable-energy business, supported by the encouraging policies rolled out by the Malaysian government,” said the research house.
TA Research said that QL Resources currently operates 395 Family Mart convenience stores and is planning to open 60 to 90 new stores in FY25, especially in the east coast region of Peninsular Malaysia.
The research house is expecting the convenience-store segment to remain resilient in FY25, especially since people are now allowed to make withdrawals from Account 3 of the Employees Provident Fund.
All three research houses have “buy” calls on the counter, with MIDF Research maintaining a target price of RM7.25, while MIB Research and TA Research have target prices of RM7.05 and RM7.40, respectively, on the stock.
