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TA Sector Research QL Resources Berhad - Margin improvements in 3QFY24
sectoranalyst Publish date: Fri, 01 Mar 2024, 11:40 AM Review QL Resources Berhad’s (QL) 9MFY24 core earnings of RM339.1mn (+24.0% YoY) came in at 86% and 88% of ours and the market’s full-year estimates. The earnings beat was underpinned by higher-than-expected performance in Palm Oil and Clean Energy segment (posted Loss Before Tax of RM2.6mn in 9MFY23) YoY, 9MFY24 revenue grew mildly by 4.4%, driven by higher contributions across the board, including: (i) Marine Product Manufacturing (MPM) (+2.3%), (ii) Palm Oil and Clean Energy (POCE) (+17.5%), and (iii) Convenience Store Chain (CVS) (+26.6%), partially offset by decline in the Integrated Livestock Farming (ILF) (-2.2%). Consequently, the PBT jumped 33.2%, thanks to overall margin improvement for all segments. MPM Segment. 9MFY24 PBT rose 11.5% and 2.3% YoY in tandem with an increase in revenue of 2.3% YoY. The growth was attributed to higher ASP of surimi-based and fish meal products. Meanwhile, the ease of input cost resulted in the MPM’s margin expansion. POCE Segment. Segmental revenue registered at RM509.8mn (+17.5% YoY) and PBT stood at RM34.1mn (compared to Loss before Tax of 2.6mn YoY). The improved performance was due to higher project progress and margin recovery of Boilermech. ILF Segment. 9MFY24 PBT jumped 40.3% YoY despite revenue dropped marginally by 2.2% YoY. The increase in earnings was supported by lower feed cost while revenue was impacted by lower ASP for layers in both Vietnam and the Philippines. CVS Segment. The revenue grew 26.6% YoY following the openings of 42 new stores. Meanwhile, earnings rose by 24.2% YoY to RM45.1mn due to higher sales and margin normalisation from store operation efficiency. No dividend was declared during this quarter. Impact Following the better-than-expected result in 3QFY24, we raise our FY24 earnings forecast by 11.5%. Outlook We expect the POCE segment to grow as we reckon the CPO price in 4QFY24 would increase slightly to c.RM3,800. Meanwhile, we anticipate the MPM segment to grow too as demand of surimi-based products is expected to be stable with decline in surimi input cost. Valuation Reiterate Buy with an unchanged DCF-driven TP of RM6.70/share (k:6.4%; g: 3.0%). Source: TA Research - 1 Mar 2024
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TA Sector Research
QL Resources Berhad - Margin improvements in 3QFY24
sectoranalyst
Publish date: Fri, 01 Mar 2024, 11:40 AM
Review
QL Resources Berhad’s (QL) 9MFY24 core earnings of RM339.1mn (+24.0% YoY) came in at 86% and 88% of ours and the market’s full-year estimates. The earnings beat was underpinned by higher-than-expected performance in Palm Oil and Clean Energy segment (posted Loss Before Tax of RM2.6mn in 9MFY23)
YoY, 9MFY24 revenue grew mildly by 4.4%, driven by higher contributions across the board, including: (i) Marine Product Manufacturing (MPM) (+2.3%), (ii) Palm Oil and Clean Energy (POCE) (+17.5%), and (iii) Convenience Store Chain (CVS) (+26.6%), partially offset by decline in the Integrated Livestock Farming (ILF) (-2.2%). Consequently, the PBT jumped 33.2%, thanks to overall margin improvement for all segments.
MPM Segment. 9MFY24 PBT rose 11.5% and 2.3% YoY in tandem with an increase in revenue of 2.3% YoY. The growth was attributed to higher ASP of surimi-based and fish meal products. Meanwhile, the ease of input cost resulted in the MPM’s margin expansion.
POCE Segment. Segmental revenue registered at RM509.8mn (+17.5% YoY) and PBT stood at RM34.1mn (compared to Loss before Tax of 2.6mn YoY). The improved performance was due to higher project progress and margin recovery of Boilermech.
ILF Segment. 9MFY24 PBT jumped 40.3% YoY despite revenue dropped marginally by 2.2% YoY. The increase in earnings was supported by lower feed cost while revenue was impacted by lower ASP for layers in both Vietnam and the Philippines.
CVS Segment. The revenue grew 26.6% YoY following the openings of 42 new stores. Meanwhile, earnings rose by 24.2% YoY to RM45.1mn due to higher sales and margin normalisation from store operation efficiency.
No dividend was declared during this quarter.
Impact
Following the better-than-expected result in 3QFY24, we raise our FY24 earnings forecast by 11.5%.
Outlook
We expect the POCE segment to grow as we reckon the CPO price in 4QFY24 would increase slightly to c.RM3,800.
Meanwhile, we anticipate the MPM segment to grow too as demand of surimi-based products is expected to be stable with decline in surimi input cost.
Valuation
Reiterate Buy with an unchanged DCF-driven TP of RM6.70/share (k:6.4%; g: 3.0%).
Source: TA Research - 1 Mar 2024
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