QL (7084) : QL Resources - Strong as usual
Target RM4.29 (Stock Rating: ADD)
QL’s 1HFY54 net profit came in line with our expectation (meeting 47.5% of our full-year forecast) and consensus (45%). We deem this to be in-line as 1H is seasonally weak. 1H revenue rose 10.6% yoy, driven by stronger sales volume and selling prices. Despite higher operating costs, net profit increased by a larger extent of 14.3% yoy, thanks to the lower net interest expense and higher associate profit. Given the in-line results, we maintain our FY15-17 EPS forecasts, Add call and target price, still based on the consumer sector average of 23x CY15 P/E. QL remains our top pick in the sector. The turnaround of its Indonesia, Vietnam, palm oil and shrimp farming businesses is a key potential re-rating catalyst. As we had expected, no dividend was declared, in line with our forecast.
Another strong quarter
QL reported another strong set of results, with 1H15 revenue and net profit increasing by 10.6% and 14.3% yoy, respectively. Its integrated livestock farming revenue (ILF: 59.5% of total sales) rose 6.9% yoy, driven by the higher sales volume of eggs and feed raw materials. Marine product manufacturing revenue (MPM: 26.2% of total sales) rose 14.4% yoy due to the (1) higher selling prices and the strong demand for fishmeal in Malaysia and Indonesia, (2) stronger surimi prices and sales volume in Indonesia, and (3) stronger sales volume from surimi-based products, driven by festivities. Its shrimp aquaculture has also started contributing to the bottomline in 2Q. QL’s palm oil revenue also increased 20.2% yoy due to more fresh-fruit bunches processed in Indonesia and higher CPO prices.
Overall margin increased slightly
While the overall EBITDA margin shed 0.4% pt yoy, QL's PBT margin rose 0.4% pt due to lower net interest expenses and higher associate profit. The lower EBITDA margin was mainly due to the lower ILF margin, on the back of high feed costs and weak egg prices in East Malaysia, Indonesia and Vietnam in 1Q. But egg prices in Peninsular Malaysia remained strong. The higher operating costs and lower fish catch in 1Q had also impacted its MPM margins. The lower margin reported by ILF and MPM masked the higher margin reported by the palm oil division – thanks to smaller losses from Indonesia’s plantation operations and better CPO prices. Peninsular Malaysia fish landing and egg prices in East Malaysia, Vietnam and Indonesia improved in 2Q.
Source: CIMB Daybreak - 21 November 2014
Target RM4.29 (Stock Rating: ADD)
QL’s 1HFY54 net profit came in line with our expectation (meeting 47.5% of our full-year forecast) and consensus (45%). We deem this to be in-line as 1H is seasonally weak. 1H revenue rose 10.6% yoy, driven by stronger sales volume and selling prices. Despite higher operating costs, net profit increased by a larger extent of 14.3% yoy, thanks to the lower net interest expense and higher associate profit. Given the in-line results, we maintain our FY15-17 EPS forecasts, Add call and target price, still based on the consumer sector average of 23x CY15 P/E. QL remains our top pick in the sector. The turnaround of its Indonesia, Vietnam, palm oil and shrimp farming businesses is a key potential re-rating catalyst. As we had expected, no dividend was declared, in line with our forecast.
Another strong quarter
QL reported another strong set of results, with 1H15 revenue and net profit increasing by 10.6% and 14.3% yoy, respectively. Its integrated livestock farming revenue (ILF: 59.5% of total sales) rose 6.9% yoy, driven by the higher sales volume of eggs and feed raw materials. Marine product manufacturing revenue (MPM: 26.2% of total sales) rose 14.4% yoy due to the (1) higher selling prices and the strong demand for fishmeal in Malaysia and Indonesia, (2) stronger surimi prices and sales volume in Indonesia, and (3) stronger sales volume from surimi-based products, driven by festivities. Its shrimp aquaculture has also started contributing to the bottomline in 2Q. QL’s palm oil revenue also increased 20.2% yoy due to more fresh-fruit bunches processed in Indonesia and higher CPO prices.
Overall margin increased slightly
While the overall EBITDA margin shed 0.4% pt yoy, QL's PBT margin rose 0.4% pt due to lower net interest expenses and higher associate profit. The lower EBITDA margin was mainly due to the lower ILF margin, on the back of high feed costs and weak egg prices in East Malaysia, Indonesia and Vietnam in 1Q. But egg prices in Peninsular Malaysia remained strong. The higher operating costs and lower fish catch in 1Q had also impacted its MPM margins. The lower margin reported by ILF and MPM masked the higher margin reported by the palm oil division – thanks to smaller losses from Indonesia’s plantation operations and better CPO prices. Peninsular Malaysia fish landing and egg prices in East Malaysia, Vietnam and Indonesia improved in 2Q.
Source: CIMB Daybreak - 21 November 2014
