March 21, 2024

Malaysia poultry stocks surge on strong 2023 earnings

Poultry-related stocks in Malaysia have witnessed a significant surge propelled by robust earnings in 2023, leading to what experts describe as a mini bull run on Bursa Malaysia, particularly since the beginning of the year, The Star reported.

Among the notable performers, Lay Hong Bhd's share price surged by 30% since mid-February, closing at MYR 0.39 (US$0.083) last Friday. Teo Seng Capital Bhd experienced a remarkable 44% year-to-date (y-t-d) increase to MYR 2.30 (US$0.49) on February 20 before moderating its gains to close at MYR 1.91 (US$0.41) last Friday. QL Resources Bhd saw a modest uptick, ending the trading week at MYR 5.93 (US$1.26) a share, marking a gain of approximately MYR 0.19 (US$0.040) from February 14. LTKM Bhd also witnessed a surge in its stock price to a year-high of MYR 1.63 (US$0.35) on March 7 from MYR 1.28 (US$0.27) on February 13, settling at MYR 1.40 (US$0.30) last Friday.

The upward trajectory in share prices, particularly among egg producers, has been attributed to robust financial results for 2023 and the continuation of subsidies and price ceilings for eggs.

According to Nixon Wong, chief investment officer at Tradeview Capital, factors contributing to the improved profitability of egg producers include subsidies recognition, elevated egg prices, increased production capacity, favourable feed costs, and export sales to Singapore, aided by the weaker value of the ringgit.

Wong cautioned that the poultry sector's performance is cyclical and dependent on feed cost pricing, demand, and supply conditions. While there might be a temporary pause in share prices due to the perception of transient subsidies, lifting the egg price ceiling could incentivise increased production in response to high demand, ultimately affecting sales volume and business performance.

Vincent Lau, head of Equity Sales at Rakuten Trade, echoed similar sentiments, attributing the year-to-date price elevation of counters such as CAB Cakaran and CCK Consolidated Holdings Bhd to the lifting of subsidies and price controls for chickens late last year.

Lau anticipated the share price uptrend to continue, driven by decreasing feed costs and increased exports overseas, indicating a positive outlook for the industry as the year progresses.

-      The Star