October 17, 2023

     

Shares of Malaysian poultry producers rise following government's budget announcement

 

 

Share prices for a host of poultry players in Malaysia embarked on a minor bull run on Bursa Malaysia on October 16, following the Malaysian government's Budget 2024 announcement on the temporary lifting of ceiling prices for chicken and eggs.

 

Lay Hong Bhd's share price rose by 12%, or 3.5 sen, to close at 32 sen, while Leong Hup International Bhd (LHI) and TPC Plus Bhd's share prices firmed 7.6% and 4.8% to settle at 64 sen and 33 sen, respectively.

 

Other poultry gainers on the market were PWF Corp Bhd and LTKM Bhd, although Teo Seng Capital Bhd and QL Resources Bhd bucked the climbing trend after posting 6% and 0.5% losses, respectively.

 

CAB Cakaran Corp Bhd, meanwhile, closed unchanged at 64 sen.

 

The overall good showing was attributed to the decision by Malaysian Prime Minister Datuk Seri Anwar Ibrahim to float the prices of the two commonly consumed staples, a move he had implied would strategically fulfill the twin motives of ensuring adequate supply while lowering the subsidy burden of the government.

 

During the tabling of Budget 2024 last week, Anwar mentioned that since February this year, the government had shouldered a total of RM3.8 billion (US$803 million) for chicken and egg subsidies, whereby the primary objective was initially to prevent an abrupt price hike or supply shortage.

 

He said further announcements pertaining to the temporary removal of the price ceiling would be made by the Agriculture and Food Security Ministry within two weeks.

 

Rakuten Trade head of equity sales Vincent Lau told StarBiz that with the unity government looking to strengthen its fiscal position – perhaps most clearly seen in the 2% addition on the sales and services tax – it is no longer feasible to continue with the level of subsidies it had extended thus far.

 

"There is talk that the government may still extend subsidies for chicken and eggs during festive periods when demand is high and that form of subsidy is more efficient than having it providing price support all year round," Lau added.

 

He expects the main beneficiaries of the price ceiling removal will be major poultry players such as LHI, CAB Cakaran, CCK Consolidated Holdings Bhd and LTKM.

- The Star