PETALING JAYA: Share prices for a host of poultry players embarked on a mini bull run on Bursa Malaysia yesterday, following Budget 2024 announcement on the temporary lifting of ceiling prices for chicken and eggs.
Lay Hong Bhd
’s share price rose by 12%, or 3.5 sen, to close at 32 sen, while Leong Hup International Bhd (LHI) and TPC Plus Bhd’s share prices firmed 7.6% and 4.8% to settle at 64 sen and 33 sen, respectively.
Other poultry gainers on the market yesterday were PWF Corp Bhd and LTKM Bhd, although Teo Seng Capital Bhd and QL Resources Bhd bucked the climbing trend after posting 6% and 0.5% losses, respectively.
CAB Cakaran Corp Bhd, meanwhile, closed unchanged at 64 sen.
The overall good showing was attributed to the decision by Prime Minister Datuk Seri Anwar Ibrahim to float the prices of the two commonly consumed staples, a move he had implied would strategically fulfill the twin motives of ensuring adequate supply while lowering the subsidy burden of the government.
During the tabling of Budget 2024 last Friday, Anwar mentioned that since February this year, the government had shouldered a total of RM3.8bil for chicken and egg subsidies, whereby the primary objective was initially to prevent an abrupt price hike or supply shortage.
He said further announcements pertaining to the temporary removal of the price ceiling would be made by the Agriculture and Food Security Ministry within two weeks.
Rakuten Trade head of equity sales Vincent Lau told StarBiz that with the unity government looking to strengthen its fiscal position – perhaps most clearly seen in the 2% addition on the sales and services tax – it is no longer feasible to continue with the level of subsidies it had extended thus far.
“So, in many ways this is a good decision.
“There is talk that the government may still extend subsidies for chicken and eggs during festive periods when demand is high and that form of subsidy is more efficient than having it providing price support all year round,” he added.
Lau expects the main beneficiaries of the price ceiling removal will be major poultry players such as LHI, CAB Cakaran, CCK Consolidated Holdings Bhd and LTKM, while flour companies such as Malayan Flour Mills Bhd could also stand to gain.
Interestingly, he expects sugar to be the next item on the list to see a price ceiling withdrawal, especially with the recent shortage of supply, as he noted that the price of sugar in Malaysia is artificially low compared to other countries.
Apart from upping the level of sugar tax, he said this is another avenue that the government can look into to reduce its subsidy load.
“Chicken and eggs are much more staple food than sugar is, as sugar is to a large extent optional and hence people can always choose to have less of it.
“Besides, price ceilings will cause unnecessary shortages as well as smuggled sales, so this is not conducive to the market,” he said.
While concurring with the government’s move, Lau acknowledged that inflation would edge up gradually over the short term, in particular for the M40 group, with Putrajaya having made known that the partial removal of diesel subsidy is next on the agenda.
He said fuel remains the main inflation determinant of the subsidy issue, adding that the government is looking to introduce subsidy reductions gradually to keep inflation in check, describing it as a short-term pain that Malaysians have to go through.
