PETALING JAYA: QL Resources Bhd
is set for stronger earnings momentum in the coming quarters, driven by tighter global fishmeal supply that is expected to lift its marine products manufacturing (MPM) segment, says Hong Leong Investment Bank (HLIB) Research.
Following engagements with the group on its first quarter ended June 30, 2026 (1Q27) results, HLIB Research said it is more “constructive” on QL Resources’ earnings outlook for the financial year ending March 31, 2027 (FY27).
The MPM segment was the key contributor to group’s earnings in 1Q27, with revenue rising 18.2% year-on-year, while pre-tax profit jumped 51.5% to RM54.37mil from RM35.88mil a year earlier, accounting for 54.4% of the group’s total pre-tax profit of RM151.32mil.
HLIB Research said management attributed the bulk of the RM30mil earnings uplift to fishmeal, driven by Peru’s lower catch quota and a temporary El Nino fishing ban.
“Peru supplies roughly a fifth of the world’s fishmeal, and in August, it called off its main anchovy season having landed only 25% of an already reduced quota,” it said.
“That keeps global supply tight, and fishmeal prices in July were still running about 11% above where they averaged through QL Resources’ 1Q27.”
As such, HLIB Research expects QL Resources to see sequentially higher realised average selling prices in 2Q27.
The research house saw the segment as the key swing factor for FY27, with the next two quarters likely to represent the peak of the cycle as they coincide with seasonally stronger landings.
“The checkpoint is Peru’s second season in November, which decides whether supply tightness carries into FY28 or begins to unwind,” it said.
The fishmeal strength should also help offset a modest drag on QL Resources’ integrated livestock farming (ILF) segment, where recovering egg prices should support earnings.
MPM and ILF were near co-equal contributors to group pre-tax profit in FY26, accounting for 38% and 39%, respectively. In 1Q27, however, MPM’s share rose to 54.4%, while ILF accounted for 32.1%.
HLIB Research said Grade C egg prices recovered from the low-20 sen range in April and May to 33 sen by the end of June and above 40 sen at the farm gate by August, supported by farm closures in Perak and higher feed costs.
It said management expects egg prices to rise further over the next three to six months, although higher feed costs and El Nino-related productivity pressures remain key watch points, with corn and soybean meal already more than 10% higher year-to-date.
QL is also targeting branded eggs to account for 25% of group egg revenue over the next five years, compared with about 18% currently.
Meanwhile, its convenience store chain (CVS) segment is showing early signs of recovery, although higher operating costs continue to weigh on profitability.
The CVS segment’s pre-tax profit fell to RM8.8mil from RM18.9mil a year earlier despite broadly similar revenue, due to higher rental, logistics and labour costs, as well as the expanded sales and service tax or SST.
HLIB Research said management is guiding for a FY27 pre-tax profit margin of 3% to 3.5%, compared with 2.7% in 1Q27, implying sequential improvement as sales recover.
Its FamilyMart network stood at 497 outlets, up 10% year-on-year, while vending machines increased 27.5% to 204.
QL Resources has also stopped pursuing Sumbangan Asas Rahmah inclusion after its bulk application was rejected.
Overall, HLIB Research reiterated its “buy” call on the stock, with an unchanged target price of RM5.10 based on a 38 times FY27 price-to-earnings multiple.
