QL Resources Bhd, already an award winning company for its strong commitment in enhancing shareholders' value, has set the stage for more expansion that will enhance its revenue and profitability.
Even though entrenched in an industry where some might say as “unexciting”, the company has attracted a list of credible stock broking houses initiating coverage on the counter.
QL, short form of Quan Li or win-win in Mandarin, is involved in fishmeal and marine products manufacturing, Crude Palm Oil milling, poultry farming and trading and distribution.
Its main assets are the two marine manufacturing plants in Hutan Melintang and Endau, two CPO milling facility in Tawau and a poultry farm in Nilai.
Its managing director Chia Song Kun said the company was looking at opportunities to expand its business, saying, “it is an opportune time given the low interest rate scenario and government initiatives” in the agriculture and fisheries industry.
“Moreover, our country still has abundant land and fish resources compared to the neighbouring countries that we can use for further value added products,” he told StarBiz in an interview at his Klang office on Thursday.
Having nearly completed its third integrated manufacturing plant for fishmeal and surimi in Sabah, the company has set sights for a similar plant in a nearby fishing area.
“We are just looking at the place now but nothing has firmed up at his juncture,” he said.
The company has also submitted an application for 30 fishing licences to carry out deep sea fishing in East Malaysia.
“We are pretty confident of getting the approval, not for all 30 but we will probably be granted with a lesser number initially,” he said.
Chia said the rationale for this venture was to reduce reliance on local fishermen for their supply of fish and also to help retain the catch into Malaysian shores from those vessels jointly operated with foreign crew.
“The initial capital expenditure per trawler is estimated at RM1mil including equipment and cold room facilities,” he said.
QL is also looking at expanding the Hutan Melintang plant upon completion of its proposed purchase of land from one of its directors under the recently announced reorganisation exercise.
“We are going to invest some RM10mil there to expand our production facility for surimi and fishmeal,” he said.
Reviewing the company's business outlook, Chia said group pre-tax profit look set to hit RM36mil this financial year ending March 31 2004, from the previous corresponding figure of around RM31.5mil.
For the half year to Sept 30, 2003, the company made RM18.3mil in pre-tax profit on the back of RM427.5mil of revenue.
Chia said revenue growth this year would come mainly from the commissioning of the second oil mill next year and the following year would be from the third marine plant in Kota Kinabalu.
CIMB Securities' analyst Stephanie Wee who had rated the stock as outperform in September when it was trading at RM3.44, has again revised upward its price target to RM5.18.
“CPO milling is growth driver for this financial year ‘04, while new marine plant that is expected to be ready by the first quarter of financial year ‘05 would provide boost to earnings. The stock has outperformed the KLCI very well,” she said in her research report.
Affin-UOB Research report has put a price target of RM5.30 while AmResearch RM5.10.
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