PETALING JAYA: Teo Seng Capital Bhd
’s locked-in feed costs provide a distinct competitive advantage and earnings predictability for the immediate horizon, despite heightened geopolitical volatility in West Asia and subsequent disruptions to global shipping.
Its cost structure remains insulated through the first half of the financial year 2026 (1H26), said Mercury Securities Research. About 60% to 75% of the group’s total cost stems from raw materials, specifically corn and soybean meal, mostly from South America. Teo Seng has secured forward contracts covering the next six months.
The company is principally involved in the production and distribution of eggs and related poultry products. With current hedges, it provides a favourable window for the group to navigate second-half input costs.
Mercury Securities Research added that its long-term outlook is driven by resilient market demand for eggs, vertically integrated operations, downstream expansion growth, expanding market share and de-escalation of global geopolitical tensions.
On the operational front, the targeted launch of egg mayo products in the fourth quarter of financial year 2026 (FY26) marks the beginning of a broader downstream roadmap, with additional product rollouts slated for FY27 or later.
Mercury Securities Research reaffirms its positive outlook on Teo Seng as it navigates the transition into a post-subsidy operating environment.
While the exit of the “subsidy super-cycle” (FY23 to FY25) naturally leads to a headline profit contraction, the research house’s meeting with management confirms a robust fundamental floor.
Its positive outlook is underpinned by margin resilience via proactive forward contracting through 1H26 and a strategic downstream pivot (fourth quarter FY26 egg mayo launch).
