Affin Hwang maintains ‘buy’ on QL Resources


  • Corporate News
  • Tuesday, 03 Dec 2019

The integrated livestock farming (ILF) segment should continue to record sequential margin improvement on a reduction in the volatility of feed raw material prices and higher earnings contribution from its regional poultry operations on the back of higher production.

KUALA LUMPUR: QL RESOURCES BHD will be seeing a seasonally stronger second half for the financial year 2020 (H2FY20) with its livestock and palm oil segments expected to see earnings improvements during the period, says Affin Hwang Capital Research.

The research unit said in its report that QL’s palm oil operations are expected to deliver a markedly strong earnings contribution in H2FY20 in tandem with the sustained recovery in crude palm oil (CPO) prices, while the integrated livestock farming (ILF) segment should continue to record sequential margin improvement on a reduction in the volatility of feed raw material prices and higher earnings contribution from its regional poultry operations on the back of higher production.

Meanwhile, the marine products manufacturing will continue to benefit from ample fish catch and expanded production capacity. Affin HWang maintained its “buy” recommendation on the stock with an unchanged target price of RM8.50.

For the recently concluded first half of FY2019, QL’s results met the expectations of Affin Hwang and the consensus with revenue and core net profit posting double-digit growth year-on-year (y-o-y).

Turnover rose 19% y-o-y to RM2.1bil in 6MFY20 with higher production driving stronger sales for its marine product manufacturing and integrated livestock segments.

Core net profit for the period rose 15% to RM120mil, underpinned by the marine segment’s robust earnings expansion while the livestock segment was mainly affected by a fluctuation in feed raw material prices and poultry average selling prices.

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QL Resources , buy , Affin Hwang , poultry , palm oil ,

   

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