Following the removal of the egg subsidy, UOBKH Research said profitability is expected to fall to three sen to five sen per egg.
PETALING JAYA: Although QL Resources Bhd
remains resilient amid trade tensions and the minimum wage hike policy, its core segments are facing a mixed outlook, according to UOB Kay Hian (UOBKH) Research.
Based on the company’s estimates, only 0.5% of total group sales are US export sales, which primarily consisted of surimi-based products, said the research house.
“Evidently, the tariff war would have a minimal direct impact on QL Resources.
“However, management does not rule out that supply disruptions and curtailed spending may indirectly impact its operations,” said UOBKH Research.
Meanwhile, 27% of the company’s workforce of 12,000 employees will benefit from the minimum wage revision, which is expected to cost the group an additional RM10mil or a digestible 1.4% of its financial year 2026 (FY26) profit before tax earnings.
Management expected to largely absorb it or see a partial cost pass through, the research house noted.
QL Resources is involved in integrated livestock farming (ILF), marine products manufacturing and palm oil activities in Malaysia, Indonesia and Vietnam.
For the ILF segment, the government has rationalised its subsidies on eggs, reduced it to from 10 sen per egg to five sen effective since May 1 and subsequently removing it on Aug 1.
The company earned an estimated 10 sen per egg under the full subsidy scheme.
Following the removal of the egg subsidy, UOBKH Research said profitability is expected to fall to three sen to five sen per egg. To protect its margins, the company is looking to lift its product mix toward its margin accretive branded eggs, which accounts for 20% of its total egg sales.
The fishing and fishmeal sub-segments are likely to see extended headwinds, the research house noted.
Fishmeal selling price has stabilised, but demand remains weak due to a slowdown in world aquaculture activity.
This is further compounded by a higher Peru fishing quota which may exert pressure on prices going forward. In contrast, surimi and surimi-based products could see an improved performance in FY26.
In the palm oil segment, growth would be driven by its solar company Plus Xnergy Holdings Sdn Bhd’s contributions that are tied to its renewable energy and environmental, social and governance solution business.
“Its palm oil contributions are likely to moderate alongside lower crude palm oil prices that have trended downward to RM3,800 from more than RM4,200 in the fourth quarter of 2025 (4Q25) amid similar fresh fruit bunch production and oil extraction rate output,” UOBKH Research said.
The research house is maintaining its “hold” stance on QL Resources’ with an unchanged target price of RM4.80, adding that key risks include unfavourable weather conditions affecting fishing yields, outbreak of poultry diseases and a sharp collapse in crude palm oil prices.
