QL Resources earnings growth trajectory intact

TA Research said the company’s business operations are expected to continue registering intact earnings growth in the second half of FY24.

PETALING JAYA: Agro-based business group QL Resources Bhd’s outlook remains stable, with its resilient marine-product manufacturing operations set to be a key driver for earnings growth in financial year 2024 (FY24).

The potential weakness in its plantation business could also be mitigated by stronger contribution from its clean-energy projects.However, its convenience store operations may continue to be impacted by higher labour and energy costs, alongside slower sales momentum amid weaker consumer sentiment, said Maybank Investment Bank (Maybank IB) Research.

TA Research said the company’s business operations are expected to continue registering intact earnings growth in the second half of FY24.

The research house retained its earnings projections and its “buy’’ call with a target price (TP) of RM6.70 a share.

Maybank IB Research has a “hold’’ call on the company with a TP of RM5.90 a share.

Hong Leong Investment Bank Research revised its FY24, FY25 and FY26 earnings for the company upwards by 6%, 5%, and 5%, respectively, to reflect better margins. It also retained its “buy’’ call with a TP of RM7.40 a share.

Meanwhile, MIDF Research adjusted its earnings forecast for FY24 to FY26 lower by minus 1%, minus 8.8% and minus 6.8%, respectively, for FY24, FY25 and FY26.

This was after factoring in lower revenue and store expansion for the convenience-store segment due to the weakening consumer sentiment, reduced revenue from palm oil and clean energy owing to the decline in crude palm oil prices and weaker demand in its Vietnam operations.

It retained its “buy’’ call but lowered its TP to RM6.25 from RM6.75 a share previously.

Kenanga Research raised its FY24 and FY25 net profit forecasts by 6% and 7%, respectively, to reflect higher margins.

It raised its TP marginally to RM5.95 a share and upgraded its call to “outperform”.

RHB Research meanwhile, maintained its “buy’’ call on QL Resources with a new TP of RM6.46 a share. It cited risks to its recommendation that include a sharp rise in input costs and intense competition.

UOB Kay Hian Research lifted its FY24 to FY26 earnings forecasts by 9.5%, 10.6% and 10.8%, respectively, off higher margin assumptions.

It maintained its “buy” call with a higher TP of RM6.80 a share from RM6.30 previously, in tandem with its raised earnings forecasts.

It said QL continued to deliver on execution and earnings delivery.

Apart from attractive valuations, it liked QL for its multi-year growth visibility, underpinned by the group’s Family Mart convenience-store business and its environmental, social and governance efforts.

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