‘Buy’ stance kept on QL Resources

Maybank Investment Bank Bhd (Maybank IB) has adjusted downwards QL Resources Group’s earnings estimates for its fiscal year 2024 by 4.0 per cent.

This is attributed to short-term challenges faced by the company in its convenience store (CVS) sales and softer average selling prices (ASPs) for surimi (mince fish meat) observed over several quarters.

Despite these setbacks, the research firm maintains its “buy” call with a target price of RM6.80. This stance is driven by the market’s ongoing optimism and the anticipation of strong demand and increased capacity, which are expected to drive future earnings growth.

Maybank IB has increased its dividend per share (DPS) estimates for financial years 20242026 to seven sen per annum.

Looking beyond QL’s immediate challenges, there were positive prospects for its Marine Products Manufacturing (MPM) and Integrated Livestock Farming (ILF) segments, said Maybank IB.

“The medium-term outlook for the MPM segment appears favourable, with a new surimi processing plant in Indonesia expected to contribute to group earnings starting from financial year 2025.

The ILF segment is anticipated to sustain its margins thanks to ongoing egg subsidies and lower feed raw material costs.

“These should buffer volatility in egg ASPs in Vietnam and Indonesia, ensuring stability in earnings for this segment,” said Maybank IB.

However, there are slight concerns regarding Family Mart, particularly with recent calls for boycotts impacting sales by about 10 per cent.

Despite this setback, the company’s plans for new store openings remain intact.