February 25, 2025

 

Leong Hup to benefit from stable average selling prices for poultry

 

 

Malaysia's Leong Hup International Bhd (LHIB) will benefit from stable average selling prices (ASPs) for poultry as demand-supply across the countries it operates is more balanced.

 

Maybank Investment Bank (Maybank IB) Research said it is keeping a positive outlook on LHIB as poultry ASPs are likely to be stable in 2025.

 

"We lift our financial year 2024 (FY24) earnings estimates by 16% upon adjusting for current operating run rates, but leave FY2025-26 unchanged, the research firm said in a report. "Maintain 'Buy' with a lower target price of 75 sen on an updated mean price-to-earnings ratio of eight times."

 

Apart from Malaysia, the poultry group has a presence in Singapore, Indonesia, Vietnam and the Philippines.

 

"Based on our channel checks, we believe that Indonesia poultry ASPs have progressively improved in the fourth quarter of 2024 (4Q24), with a potential increase of 9% to 14% quarter-on-quarter for both broiler and DOC (day-old-chick) ASPs given better demand-supply dynamics," Maybank IB Research added.

 

Meanwhile, the research house said Malaysia and Vietnam poultry ASPs have also remained steady due to the effects of domestic industry consolidation and gradual demand growth in Vietnam. As at end-Q3 2024, Indonesia, Malaysia and Vietnam accounted for 37%, 25%, and 20% of group revenue, respectively, the firm said.

 

Maybank IB Research noted that there has been a significant easing in LHIB's feed raw material ASPs where average corn and soybean prices have fallen fell by about 24% and 22% year-on-year, respectively, in 2024.

 

The firm expects feed mill earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins to gradually soften as LHIB passes on its cost savings to customers.

 

However, the group's livestock Ebitda margins are expected to remain elevated in the near term.

- The Star