KUALA LUMPUR (March 1): Shares in QL Resources Bhd rose to their highest in nearly three years on Friday morning, as analysts predicted larger gains in prices after the agri-food company reported above-view, record quarterly earnings.
The counter rose nearly 4% to RM6.02, the highest since May 2021. At 10.30am, the stock was trading at RM6.01, valuing the company at over RM14 billion, after more than 2.1 million shares changed hands. In contrast, the benchmark FBM KLCI was marginally lower.
The livestock and marine product segments are expected to “continue charting better growth”, said Hong Leong Investment Bank, which now has the highest target price (TP) for QL Resources. At a TP of RM8.11, QL Resources is worth 45 times the projected earnings for the financial year ending March 31, 2024 (FY2024), a “rich” valuation justified by key consumer staples.
QL Resources shares have risen about 5% so far this year, beating the broader consumer sector’s year-to-date gain of 4%, as investors flocked to the stock to weather a potential decline in discretionary spending due to rising cost of living.
A broad majority of 11 out of 13 analysts covering QL Resources recommended investors to continue buying the stock, with Maybank Investment Bank the latest to have a 'buy' call. Another two have 'hold' ratings. The median 12-month TP is RM6.69, according to Bloomberg, suggesting a potential gain of 11% from the current price.
“We believe QL Resources’ positive earnings trajectory is sustainable”, with continued egg subsidies from the government, and a stable marine product outlook, said Maybank. Falling feed raw material costs “cement our positive outlook for the overall poultry sector”, it added.
QL Resources’ net profit rose 27.2% to RM123.62 million for the third quarter ended Dec 31, 2023 from a year earlier, with all its business segments reporting a better performance and racking up RM339.07 million in total net profit for the cumulative nine months.
The company declared an interim dividend of three sen per share totalling RM73.01 million to be paid on March 29.
Apart from livestock farming and marine products, QL Resources also produces palm oil, and operates the FamilyMart convenience store chain in Malaysia.
“We expect the [convenience store] segment to continue its growth, premised on new store openings and a higher utilisation rate of the second central kitchen,” said MIDF Amanah investment Bank, noting QL Resources’ plan to open more stores in the northern and east coast regions of Peninsular Malaysia.
The company had a total of 385 FamilyMart and FamiCafé outlets, as well as 89 FamilyMart Mini kiosks at the end of 2023.