Leong Hup International’s Q2 2025 Performance: Navigating Challenges with Resilience
Hello fellow investors and market watchers!
Today, we’re diving into the latest financial report from Leong Hup International Berhad (LHI), a prominent player in the livestock and feedmill industry across Southeast Asia. The company recently released its unaudited interim financial report for the second quarter ended 30 June 2025, and it presents a mixed picture of growth in some areas alongside persistent market challenges.
While the individual quarter saw some dips in revenue and profit compared to the same period last year, the cumulative performance for the first half of 2025 shows a commendable increase in net profit and earnings per share. Notably, LHI has also announced a single-tier first interim dividend for the financial year, demonstrating its commitment to shareholder returns. Let’s unpack the details.
Financial Highlights: A Snapshot of Performance
Leong Hup International experienced a dynamic second quarter. While quarterly revenue and net profit saw a slight decline compared to the same period last year, the company’s year-to-date performance for the first half of 2025 tells a more encouraging story with growth in key profit metrics.
Overall Group Performance: Second Quarter 2025 vs. Second Quarter 2024
For the individual quarter ended 30 June 2025, LHI reported a decrease in revenue and profit compared to the same period last year:
Q2 2025
Revenue: RM2,133,498,000
Profit before Taxation: RM155,959,000
Net Profit: RM118,628,000
Basic Earnings per Share: 2.51 sen
Q2 2024
Revenue: RM2,355,069,000 (-9.4%)
Profit before Taxation: RM184,552,000 (-15.6%)
Net Profit: RM144,148,000 (-17.7%)
Basic Earnings per Share: 2.64 sen (-4.9%)
The decline in the second quarter’s performance was primarily driven by lower selling prices and reduced sales volumes in the Indonesian market for Day-Old Chicks (DOC) and broilers, as well as lower feed selling prices in several key regions. However, this was partially mitigated by robust performance in other markets, as we’ll see.
Year-to-Date Performance: First Half 2025 vs. First Half 2024
Looking at the cumulative performance for the first six months of 2025, LHI demonstrated resilience, particularly in profit growth:
H1 2025
Revenue: RM4,344,403,000
Profit before Taxation: RM314,355,000
Net Profit: RM259,310,000
Basic Earnings per Share: 5.32 sen
H1 2024
Revenue: RM4,766,042,000 (-8.8%)
Profit before Taxation: RM309,473,000 (+1.6%)
Net Profit: RM239,075,000 (+8.5%)
Basic Earnings per Share: 4.19 sen (+27.0%)
Despite a dip in year-to-date revenue, LHI managed to grow its profit before tax by 1.6% and net profit by a significant 8.5%, leading to a remarkable 27.0% increase in basic earnings per share. This indicates improved operational efficiency and margin management across the group.
Performance vs. Immediate Preceding Quarter: Q2 2025 vs. Q1 2025
Compared to the first quarter of 2025, the second quarter showed a slight decrease in performance:
Q2 2025
Revenue: RM2,133,498,000
Profit before Taxation: RM155,959,000
Q1 2025
Revenue: RM2,210,905,000 (-3.5%)
Profit before Taxation: RM158,396,000 (-1.5%)
The sequential decline was mainly due to Indonesia experiencing lower selling prices and sales volumes for feed and DOC, coupled with lower broiler selling prices. However, Malaysia’s robust growth, driven by higher selling prices and sales volumes of DOC and increased broiler sales, partially mitigated this impact.
Business Unit Performance: A Closer Look
Livestock and Poultry Related Products
This segment saw a revenue decrease of 5.1% to RM1,298,112,000 in Q2 2025 compared to RM1,367,993,000 in Q2 2024. EBITDA also declined by 19.3%. The main drag was the Indonesian market due to lower selling prices and reduced sales volumes for Day-Old Chicks (DOC) and broilers. In contrast, Malaysia experienced an increase in revenue, supported by higher prices and volumes of DOC and broilers. The Philippines also recorded growth driven by higher selling prices and volumes of dressed chicken and broilers.
For the cumulative first half of 2025, revenue for this segment decreased by 2.3% to RM2,622,847,000. However, remarkably, EBITDA for the segment *increased* by 2.9% to RM230,810,000 compared to the same period last year, primarily due to improved margins across key operating markets. This showcases effective cost management despite revenue pressures.
Feedmill Segment
The Feedmill segment’s revenue declined by 15.5% to RM831,997,000 in Q2 2025 from RM984,177,000 in Q2 2024, with EBITDA also falling by 8.2%. The reduction was mainly attributed to lower selling prices in Indonesia (despite higher sales volume), and lower selling prices coupled with reduced sales volumes in Vietnam and Malaysia. The Philippines, however, provided a bright spot with increased feed revenue driven by higher sales volume.
Year-to-date, the Feedmill segment’s revenue was down 17.4% to RM1,714,707,000, and its EBITDA decreased by 9.1% to RM287,721,000 compared to the same period last year. This highlights the ongoing challenges in feed pricing and volume across several markets.
Financial Health: A Strengthening Position
LHI’s balance sheet as at 30 June 2025 shows an improvement in its financial health. Net assets per share increased to RM0.6892 from RM0.6740 at the end of 2024. The company’s cash and bank balances also saw a healthy rise to RM801,524,000 from RM770,670,000. Total borrowings decreased from RM1,994,705,000 at the end of 2024 to RM1,872,618,000, indicating a disciplined approach to debt management. Furthermore, net cash flow from operating activities for the first half of 2025 improved significantly to RM450,044,000 compared to RM400,550,000 in the prior year, a positive sign of operational strength.
Outlook, Risks, and Strategies
LHI maintains a “cautiously optimistic” stance for the future. The company sees continued opportunities for growth in chicken and egg consumption per capita in its operating countries. Furthermore, it anticipates that margins will remain relatively stable, supported by the current outlook on feed input costs, particularly for corn and soybean meal. The Group expects to deliver a satisfactory performance in 2025, barring unforeseen circumstances.
However, like any business in a dynamic environment, LHI faces several considerations:
- Market Uncertainty: Heightened uncertainty from tariff announcements by the United States of America could have broader implications.
- Seasonal Factors: The livestock business is inherently subject to seasonal influences. Hotter weather can slow poultry growth, potentially reducing supply and impacting prices. Festive seasons typically see higher consumption, while periods immediately following Ramadan and Hari Raya can see lower demand. School holidays usually boost sales, except in Singapore.
In response to these, LHI is committed to prudent resource management to ensure sustainable growth.
Dividends: Rewarding Shareholders
Leong Hup International has previously announced and paid a single-tier first interim dividend of 1.00 sen per ordinary share, amounting to RM36.0 million, for the financial year ending 31 December 2025. This dividend was paid on 1 July 2025, reflecting the company’s consistent effort to return value to its shareholders.
Summary and Investment Recommendations
Leong Hup International’s second-quarter results highlight a mixed but ultimately resilient performance. While the quarter itself faced headwinds, particularly in the Indonesian market, the year-to-date figures underscore the company’s ability to drive profit growth through improved margins and operational efficiency despite revenue declines. The strengthened balance sheet and robust operating cash flow further reinforce its financial stability.
The company’s cautious optimism, backed by favorable long-term consumption trends and stable feed costs, provides a positive foundation. However, potential investors should also be aware of the ongoing legal challenges related to the MyCC’s infringement finding and the broader geopolitical uncertainties that could affect its operating environment.
Key points to consider include:
- MyCC Legal Challenge: Leong Hup Feedmill Malaysia Sdn. Bhd. is currently facing a significant financial penalty of RM157.47 million from the Malaysia Competition Commission (MyCC). While the company is vigorously appealing this decision and has secured a stay order on the payment, the outcome of this litigation, with a decision expected on 2 October 2025, remains a crucial risk factor for the Group.
- Geopolitical Trade Tensions: The uncertainty stemming from US tariff announcements could impact global trade flows and raw material costs, indirectly affecting LHI’s operations.
- Commodity Price Volatility: While the outlook for feed input costs (corn and soybean meal) is currently stable, any sudden shifts in global commodity prices could affect LHI’s margins and profitability.
- Regional Market Dynamics: Performance is highly dependent on specific market conditions in Malaysia, Indonesia, Vietnam, Philippines, and Singapore. Local supply-demand imbalances or regulatory changes could influence segment profitability.
Monitoring these factors, alongside the company’s strategic responses, will be key to understanding LHI’s trajectory.
Your Thoughts?
Leong Hup International is clearly navigating a complex market landscape. Given their cumulative profit growth and strategic focus on margin improvement, do you think the company can maintain this positive momentum in the coming quarters? What are your views on the challenges they face?
Share your insights and perspectives in the comments section below! And don’t forget to check out our other analyses of Malaysian companies for more informed discussions.
