Leong Hup Q3 net profit up on higher revenue

  • Business
  • Wednesday, 27 Nov 2019

PETALING JAYA: Leong Hup International Bhd’s (LHI) net profit rose 26% to RM44.38mil in the third quarter ended Sept 30,2019 (3Q19) from RM35.20mil a year ago on the back of improvement in group revenue.

In a filing with Bursa Malaysia, the largest poultry producer in South-East Asia said its revenue was up to RM1.52bil in the quarter compared with RM1.42bil a year ago, mainly driven by the sales of livestock and poultry-related products.

“The increase was primarily due to an increase in the average selling price and sales volume of broiler chickens and eggs in Malaysia, ” it added.

LHI’s livestock and poultry-related product segment revenue improved 5.3% to RM858.21mil from RM814.88mil a year ago.

The group pointed out that higher revenue from Malaysia was partially offset by a decrease in revenue from Indonesia. “The decrease in revenue from Indonesia was mainly due to a decrease in the average selling price of day-old-chicks, ” it added.

Meanwhile, LHI’s feedmill segment’s revenue was up 10% to RM665.8mil in 3Q19 from RM605.35mil in the corresponding period a year earlier due to the increase in sales volume and average selling price of livestock feed in Indonesia and Vietnam.

Overall, the group said that Indonesia remained the largest contributing segment of the group, contributing 34.9% or RM532.10mil to the group total revenue for 3Q19, with Malaysia being the second-highest revenue contributor at RM426.34mil.

Vietnam, Singapore and the Philippines contributed RM344.43mil or 22.6%, RM201.75mil or 13.2% and RM19.39mil or 1.3%, respectively.

Moving forward, LHI group chief executive officer Tan Sri Francis Lau expects Indonesia and Vietnam to continue seeing growth and contribute towards the group’s bottom line.

“The group has also taken steps to strengthen its geographical diversification, ” he said in a statement yesterday.

With the recent foray into the Myanmar market, Lau said the group intends to penetrate the market through the livestock segment.

“The group’s venture into Myanmar is at a preliminary stage, and thus, is not expected to make any material contribution to the group’s earnings for the financial year 2019 ending Dec 31 (FY19) and FY20.

Last month, LHI formed its wholly owned subsidiary in Myanmar, Leong Hup Myanmar Co, Ltd.

Overall, Lau remains optimistic on the prospects of the group despite the volatility in poultry selling prices this year.

“The higher sales volume of both the livestock and feed is expected to mitigate the seasonally weaker livestock prices in 4Q19.

“Barring unforeseen circumstances, the group is expected to register a satisfactory financial performance for the remaining period of the year, ” he said.

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