KUALA LUMPUR: Leong Hup International Bhd posted a much improved set of financial results in the third quarter ended Sept 30,2019, underpinned by an improvement in broiler chickens and eggs and livestock feed prices.
LHI, one of the largest fully integrated producers of poultry, egg and livestock feed in Southeast Asia, announced on Tuesday its net profit rose by 26% to RM44.38mil from RM35.20mil.
Its revenue increased by 7.4% to RM1.527bil from RM1.422bil. Earnings per share were 1.22 sen compared with 1.04 sen.
During the quarter under review, LHI and its subsidiaries reported higher revenue for its livestock and poultry related products segment, which improved by 5.3% to RM858.21mil from RM814.88mil a year ago.
Underpinning the stronger revenue was the stronger average selling price and sales volume of broiler chickens and eggs in Malaysia.
LHI's feedmill segment continued to expand in 3Q FY19, as revenue rose by 10% to RM665.80mil from RM605.35mil.
“The improvement in this segment was primarily due to the increase in sales volume and average selling price of livestock feed in Indonesia and Vietnam, ” it said.
On a geographical segmentation review, Indonesia continues to be the largest contributing segment of the Group, contributing 34.9%, equivalent to RM532.10mil to the group’s total revenue for 3Q.
Malaysia remained the second highest revenue contributor to the group’s total revenue at RM426.34 million or 28.0% while Vietnam, Singapore and Philippines contributed RM344.43mil or 22.6%, RM201.75mil or 13.2% and RM19.39mil or 1.3% respectively.
For the cumulative nine-month period ended Set 30, its revenue increased by 7.6% to RM4.51bil from RM4.19bil in the previous corresponding period. The group’s net profit was lower at RM121.05mil conpared with RM153.55mil.
LHI executive director/ group CEO, Tan Sri Francis Lau Tuang Nguang said: “The group’s performance was commendable during the third quarter this year, and this highlights the resiliency of our business model, where our feedmill segment in Indonesia and Vietnam continued to see growth in volume and sales.”
He added there was a marked improvement in contribution from its livestock segment in Malaysia during the third quarter as compared with the last quarter.
Lau remained sanguine on LHI Group's prospects despite volatility in poultry selling prices seen this year.
“The higher sales volume of both livestock and feed is expected to mitigate the seasonally weaker livestock prices in the fourth quarter of 2019. Barring unforeseen circumstances, the group is expected to register a satisfactory financial performance for the remaining period of the year.”
Lau pointed out while Indonesia and Vietnam are expected to continue to see growth and contribution towards the group’s bottomline, the Group has also taken steps to strengthen its geographical diversification.
On Oct 16, LHI incorporated Leong Hup Myanmar Co., Ltd, a unit in Myanmar which marks its first step to tap into the growing economy and meat consumption in Myanmar.
“We intend to penetrate the market through the livestock segment, ” he said.
However he said the Myanmar venture “is at a preliminary stage and thus, is not expected to make any material contribution to the group’s earnings for the FY2019 and FY2020”.
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