PETALING JAYA: CGS International Research (CGSI Research) expects QL Resources Bhd
’s potential expansion into adjacent verticals could possibly bolster further growth for the agro-based group moving forward.
Following a recent analysts’ call with the QL Resources’ management, the research house said “apart from expanding its product range in the proteins business, which we assume encompasses its ongoing ventures in broiler chickens and aquaculture, the group’s management alluded to the need to have better control over the supply chain of its products, potentially expanding its retail reach outside of convenience stores.
“While no further details were provided, given QL Resources’ success with the Family Mart franchise, this seems a credible opportunity to plug the earnings gap from the sale of its plantations business,” CGSI Research said in a report yesterday.
“With a net gearing of less than 10%, this provides the group with financial flexibility, in our view,” the research house added.
QL Resources’ management also provided a neutral outlook on its earnings for its financial year ending March 31, 2026 (FY26) .
It expects the combination of egg subsidy rationalisation (five sen each in May and August this year) coupled with the lifting of the price ceiling by Aug 1 to lead to a normalisation in profits on subsidised eggs to between three sen and four sen per egg.
“An expansion of its branded egg segment, currently around 20% of eggs, is hoped to lift profitability over time,” added CGSI Research.
Management was also upbeat on the clean-energy business under 53%-owned BM Greentech Bhd, whose pre-tax profit jumped 35% year-on-year (y-o-y) to RM73.5mil in FY25 helped by the acquisition of solar company Plus Xnergy in July 2024.
The research house upgraded the stock from a “reduce” call to “hold” following its 10.9% share price decline over the past six months, but at a lower target price of RM4.37 per share.
“We believe QL Resources’ 30.5 times calendar year 2026 price-earnings ratio better reflects its 14.3% recurring return on equity, but the upside is likely to be capped by slowing earnings growth in FY26,” it noted.
