Leong Hup International’s Q1 2025: Navigating Headwinds with Strong Profit Growth
Leong Hup International Berhad (LHI), a prominent name in the integrated poultry industry, has just released its interim financial report for the First Quarter ended 31 March 2025. This report offers a glimpse into the company’s performance amidst evolving market dynamics. While revenue saw a slight dip, LHI managed to significantly boost its net profit, signaling resilience and strategic adjustments in its operations. A notable highlight for shareholders is the declaration of a single-tier first interim dividend, reflecting the company’s commitment to returning value.
Key Takeaway: Despite a marginal decrease in revenue, Leong Hup International achieved a remarkable 48.2% increase in net profit for Q1 2025 compared to the same period last year, alongside a declared interim dividend of 1.00 sen per share.
Core Financial Highlights: A Closer Look at the Numbers
LHI’s Q1 2025 performance paints a mixed picture, with revenue experiencing a slight contraction but profitability seeing a strong rebound. Here’s a breakdown of the key financial figures:
| Financial Metric | Q1 2025 (RM’000) | Q1 2024 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 2,210,905 | 2,410,973 | (8.3%) |
| Profit Before Taxation | 158,396 | 124,921 | 26.8% |
| Net Profit for the Period | 140,682 | 94,927 | 48.2% |
| Basic Earnings Per Share (sen) | 2.81 | 1.55 | 81.3% |
Let’s dive into some of these figures more closely:
Revenue Performance
Q1 2025 Revenue: RM2,210.9 million
Q1 2024 Revenue: RM2,410.9 million
The group’s total revenue for Q1 2025 saw an 8.3% decrease compared to the same period last year. This was primarily driven by lower average selling prices across all markets and reduced sales volume in key segments, particularly in the Feedmill business.
Profit Before Taxation (PBT)
Q1 2025 PBT: RM158.4 million
Q1 2024 PBT: RM124.9 million
Despite the revenue decline, LHI demonstrated strong operational efficiency, with Profit Before Taxation surging by 26.8%. This significant improvement is largely attributed to higher average selling prices and reduced costs in the Livestock and Poultry related products segment, particularly in Malaysia, Vietnam, and the Philippines, which helped to offset the lower revenue in the Feedmill segment.
Net Profit for the Period
Q1 2025 Net Profit: RM140.7 million
Q1 2024 Net Profit: RM94.9 million
The net profit for the financial period attributable to owners of the Company saw an impressive 48.2% jump, reaching RM101.8 million compared to RM56.6 million in Q1 2024. This substantial increase highlights the effectiveness of cost management and improved margins.
Earnings Per Share (EPS)
Q1 2025 Basic EPS: 2.81 sen
Q1 2024 Basic EPS: 1.55 sen
Reflecting the strong profit growth, basic earnings per share also saw an 81.3% increase, a positive sign for shareholders.
Segmental and Geographical Performance Breakdown
Livestock and Poultry Related Products
Revenue in this segment saw a marginal increase of 0.7% to RM1,324.7 million. While the Philippines contributed positively with higher average selling prices and sales volume of dressed chicken, this was largely offset by reductions in Malaysia and Singapore due to lower egg prices and reduced fresh chicken and duck sales volumes respectively. Crucially, EBITDA for this segment surged by 43.9%, driven by improved selling prices and reduced costs across Malaysia, Vietnam, and the Philippines.
Feedmill Segment
The Feedmill segment experienced a 19.2% revenue decline to RM882.7 million. This was primarily due to lower average selling prices across all operating countries, following a reduction in raw material costs, and lower sales volumes in Vietnam and Malaysia. Consequently, EBITDA for this segment was 9.9% lower, though partially cushioned by the timing difference in passing cost savings to customers.
Geographical Contributions
From a geographical perspective, the overall revenue decline was largely influenced by lower contributions from Indonesia (down from RM974.9 million to RM856.7 million) and Vietnam (down from RM471.7 million to RM401.4 million). However, the Philippines showed robust growth, with revenue increasing from RM167.3 million to RM182.2 million, contributing positively to the Livestock segment’s performance.
Financial Health and Cash Flow Management
LHI’s balance sheet remains solid. As at 31 March 2025, total assets stood at RM6,313.4 million, slightly down from RM6,444.3 million at the end of 2024. Total borrowings decreased from RM1,994.7 million to RM1,861.7 million, indicating a reduction in debt. The net assets per share also improved to RM0.6934 from RM0.6740, reflecting an increase in equity attributable to owners.
From a cash flow perspective, the company generated healthy net cash from operating activities of RM243.1 million in Q1 2025, a significant improvement from RM118.6 million in Q1 2024. This strong operational cash generation is a positive indicator of the company’s ability to fund its activities and manage its financial obligations, even though the overall cash and cash equivalents saw a slight decrease due to investing and financing activities, including the repurchase of treasury shares.
Risks and Prospects: Navigating a Dynamic Landscape
The global economic environment remains challenging. The report acknowledges the impact of potential shifts in global market dynamics, including fears of an economic downturn, which could affect the business. However, LHI maintains a cautiously optimistic outlook. The management highlights the significant opportunity for growth in chicken and egg per capita consumption within its operating countries.
Furthermore, the easing of feed input costs, particularly for corn and soybean meal, is expected to provide a cushion for profit margins. In light of these uncertainties, the Group emphasizes its commitment to prudent financial management. Barring unforeseen circumstances, LHI anticipates delivering a satisfactory performance for the full financial year 2025.
One ongoing significant event is the legal challenge regarding the Malaysia Competition Commission’s (MyCC) finding of an infringement against Leong Hup Feedmill Malaysia Sdn. Bhd. (LFM), a wholly-owned subsidiary. LFM is appealing the decision and has secured a stay order from the High Court regarding the payment of the financial penalty, pending the disposal of its judicial review application. This ongoing litigation represents a contingent liability that the company is actively managing.
Dividend Announcement
In a positive development for shareholders, the Board declared a single-tier first interim dividend of 1.00 sen per ordinary share for the financial year ending 31 December 2025. This dividend, amounting to RM36.0 million, is payable on 1 July 2025 to depositors registered by 16 June 2025. This shows the company’s commitment to shareholder returns despite the challenging environment.
Summary and
Leong Hup International’s Q1 2025 report showcases a resilient performance, with a substantial increase in net profit despite a slight dip in overall revenue. The improved profitability was largely driven by better margins in the Livestock and Poultry segment, benefiting from higher selling prices and reduced input costs. The company’s strong operational cash flow generation further underscores its financial stability.
While global economic uncertainties and the ongoing MyCC legal case present potential challenges, LHI remains focused on capitalizing on the growth potential in per capita chicken and egg consumption in its markets, alongside managing costs effectively. The declared interim dividend is a positive signal to investors, reflecting confidence in future performance.
Key points to consider moving forward:
- The ability of the Livestock and Poultry segment to sustain its improved margins.
- The impact of fluctuating raw material costs on the Feedmill segment’s profitability.
- The outcome and financial implications of the ongoing MyCC legal proceedings.
- The effectiveness of the company’s prudent financial management strategies in navigating global economic headwinds.
Final Thoughts and What’s Next?
Leong Hup International’s Q1 2025 results demonstrate the company’s ability to adapt and find efficiencies in a dynamic market. The significant boost in net profit, even with a revenue decrease, suggests strong internal management and cost control. As Malaysian retail investors, understanding these nuances is crucial.
What are your thoughts on LHI’s performance? Do you believe the easing feed input costs will continue to significantly benefit their margins throughout 2025? Share your perspectives in the comments below!
