QL Resources core net income forecast to dip by 5% in FY18-20

New high for Dagang NeXchange Bhd

PETALING JAYA: QL Resources Bhd, which saw its net profit for the fourth quarter ended March 31, 2017 (Q4 17) surged by 24%, could see lower core net income in financial year 2018 to 2020 (FY 18-20) from poorer fish catches and lower egg  average selling price (ASP).

Hong Leong Investment Bank (HLIB) Research on Tuesday said it was revising its FY18-20 core net income forecasts downward by 5% per annum to account for lower egg selling price assumptions.

Towards this end, the research house also lowered the target price of the stock to RM4.14 from RM4.23 previously and downgraded it to sell from hold. 

On a quarterly basis, core net income for Q4 17 dived 36.8% to RM35.5mil (from RM56mil) due to lower fish catches and ASP for eggs. 

For FY17, core net income fell 4.1% to RM184.2mil due to major correction in ASP for eggs in the second half as well as lower fish landings. 

These were partially mitigated by higher fresh fruit bunches (FFB) output as more planted areas in Indonesian oil palm plantation estates turning mature, the brokerage added. 

“A larger amount of QL’s Indonesian oil palm plantation is turning mature and should add to earnings going forward. Additionally, the group will continue its long term vision of opening FamilyMart convenience stores rapidly. 

“Nevertheless, the MPM and ILF divisions remain QL’s bread and butter, cumulatively accounting for upwards of 80% of profit before tax (PBT), HLIB noted. 

QL’s venture into the convenience store business is on track. To-date, the group has opened 10 outlets, with plans to aggressively expand to 1,000 outlets by 2025 (source: Nikkei Asian Review).

For the Q4 17, the company saw its net profit jumped by 24% to RM47.24mil from RM38.14mil a year ago. This was mainly due to higher crude palm oil (CPO) price and gains from a disposal.

Revenue for the quarter was also up by 6% to RM813.7mil from RM770.2mil in the corresponding quarter last year.