HLIB Research said the group’s integrated livestock farming division continues to gain from solid domestic performance and improving regional dynamics.
PETALING JAYA: Despite short-term moderation in some segments, QL Resources Bhd
is expected to see strong structural growth across all its core businesses.
QL farms eggs and manufactures fish substitutes in various regions throughout Asia.
Hong Leong Investment Bank Research (HLIB Research) said the group’s marine-products manufacturing (MPM) segment will benefit from capacity expansion, while its integrated livestock farming division continues to gain from solid domestic performance and improving regional dynamics.
Despite a softer performance in the MPM segment in the third quarter ended Dec 31, 2024 of its 2025 financial year (3Q25), HLIB Research said it remained optimistic about the company, supported by stable demand for surimi and surimi-based products.
“The surimi segment should remain resilient, aided by stabilising selling prices and a more favourable Japanese yen. Meanwhile, the performance of surimi-based product is likely to hold steady, underpinned by lower input costs and a stable US dollar,” the research house said in a report.
Over the medium term, the research house said it believes the downstream segment will be a key growth driver, bolstered by expanding production capacity. Sales of QL Resources’ frozen-food products contributed on average 52% of the group’s profit before tax over the past three years.
For livestock farming, the research house said the division charted a commendable performance in 3Q25 with profit before tax up by about 20% year-on-year supported by its Malaysia operations.
It added margins were anticipated to remain healthy with prices of raw material for feed normalising from a high base.
Additionally, layer poultry farming operations in Malaysia should benefit from lower feed costs and ongoing cost subsidies.
In Indonesia, the segment was poised for improvement due to a recovery in egg prices and enhanced productivity.
On the other hand, the group’s Vietnam operations face challenges from depressed egg prices despite lower feed costs.
Similarly, its broiler operations in Sabah and Sarawak may come under pressure from weak prices and productivity setbacks due to disease.
As for the palm oil and clean energy segment, HLIB Research said it was emerging as a strong profit driver alongside resilient palm oil margins with elevated crude palm oil prices.
It noted that 3Q25 profit before tax for the segment surged by 217%, thanks to better margins and progress at 56.57%-owned BM Greentech Bhd.
Meanwhile, the group’s FamilyMart convenience chain may experience softer performance in 4Q25 due to the shorter February and the fasting month in March.
Nevertheless, HLIB Research said QL Resources’ long-term growth trajectory remains intact, driven by local consumption and strategic expansion.
“We maintain a ‘buy’ call, with unchanged target price of RM6 based on 45 times price-earnings to FY25 earnings per share. Its valuation is justified by its status as a key consumer staple,” the research house said.
