PETALING JAYA: QL Resources Bhd plans to carry out price adjustments to mitigate the impact of higher input costs for better margin improvement in the coming quarter.
The company expects stronger demand for its surimi-based products from its marine product management (MPM) segment in the first quarter of financial year 2023 (1Q23) due to supply interruptions from India, Vietnam and Russia.
FamilyMart will remain its pillar of growth and it is also transforming from the palm oil business to focus more on clean energy, said TA Research in a report yesterday.
It has 300 FamilyMart stores and expects robust growth in sales in FY23. Growth from FY24 onwards is expected to be driven mainly by the opening of new stores rather than same-store sales growth. It plans to add another 300 FamilyMart stores over the next five years and a further upside can be expected if it expands into Singapore.
However, TA Research cut its FY23 earnings forecast by 2.7% while it raised FY24 and FY25 earnings by 5.2% and 14.2% respectively to take account of higher sales from MPM and integrated livestock (ILF) segment from higher selling prices or stronger demand.
For its ILF segment, the ceiling price and export ban of broiler chickens will not impact QL as the group has no broiler chicken operations in Peninsular Malaysia.
For 1Q23, layer farming in Peninsula Malaysia continues to see recovery in demand, amidst tight supply.
The research house said the Indonesian market recovery is expected to be slower, while Vietnam’s egg price is expected to remain high as supply is still unable to meet the demand recovery.
With global commodity prices softening in recent weeks, it expects margin erosion to improve in 3Q23 onwards.
TA Research added that the Indonesia and Vietnam markets will remain the focus of expansion for QL, as the egg consumption per capita per annum is still less than half of that in Malaysia.
QL will focus more on clean energy and water engineering, procurement and construction business as part of its sustainable growth strategy.
TA Research said it believes the group is planning to divest its palm oil business at a suitable price.
The clean energy segment’s sales are expected to improve with substantial orders in hand, while profitability should continue to be adversely impacted by high material costs and labour shortages that have beleaguered the nation, it said.