March 5, 2024

Malaysian egg producer Lay Hong Bhd reports nearly eightfold surge in net profit

Malaysian egg producer Lay Hong Bhd announced a significant surge in net profit for the third quarter ended December 31, 2023, driven by government subsidies that mitigated a decline in sales, The Edge Malaysia reported.

According to an exchange filing, Lay Hong reported a net profit of MYR 54.91 million (US$11.6 million) for the quarter, nearly eight times higher than the MYR 6.96 million (US$1.4 million) recorded in the same period a year earlier. Despite a slight decrease in revenue to MYR 266.7 million (US$56.4 million) from MYR 267.16 million (US56.5 million) year-on-year, the company's profitability soared.

Lay Hong cautioned about the challenging industry landscape ahead, citing ongoing pressure from the continuous importation of frozen chicken into the domestic market and the impact of a weakening ringgit against the US dollar, despite declining feed costs. Consequently, the company did not declare any dividends for the quarter.

In terms of revenue segments, integrated livestock farming witnessed a 24.38% decline to MYR 219.25 million (US$46.4 million) due to lower egg sales volumes resulting from decreased egg production. Conversely, food manufacturing revenue surged by 3.8 times to MYR 138.54 million (US$29.3 million), driven by increased volumes of primary processed and further processed poultry products. Meanwhile, the company's retail business experienced a 13% revenue drop to MYR 56.56 million (US$11.9 million) due to decreased sales quantities.

For the cumulative nine months ended December 31, 2023, Lay Hong reported a fourfold increase in net profit to MYR 62.95 million (US$13.3 million) from MYR 14.95 million (US$3.1 million) a year earlier, despite a 4% decline in revenue to MYR 768.73 million (US$162.7 million) from MYR 800.47 million (US$169.4 million) previously.

Lay Hong remains optimistic about its profitability, emphasising diversification into further processing and liquid egg production, with downstream activities contributing 34% of revenue compared to 25% in the previous year. Additionally, the recent acquisition of the remaining 51% stake in Nutriplus Food Manufacturing Sdn Bhd is expected to enhance efficiency in food manufacturing through production integration.

As of Monday's trading, Lay Hong shares fell by two sen or 5.1% to 37 sen, valuing the company at MYR 274 million (US$58 million) on Bursa Malaysia, ahead of the results announcement.

-      The Edge Malaysia