QL: Strategic Expansion Plans Unveiled for Future Growth
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A major integrated food manufacturing hub, the QL Innofood Park, is set to significantly enhance capacity and diversify product offerings for a leading regional surimi producer and egg producer. The RM1.3 billion project, located on a 100-acre site in Hutan Melintang, Perak, will be developed in phases over a decade.
Strategic Expansion Details
Upon its full completion, the park is projected to house 13 production facilities with a combined annual capacity of up to 130,000 metric tonnes. This represents a substantial 2.5-fold increase from the existing 50,000 metric tonnes capacity. The initial phase, focusing on establishing crucial core infrastructure such as smart cold storage, sustainable utilities, and advanced logistics systems, is slated for completion by mid-2027 with an initial investment of RM300 million. The group plans to allocate approximately RM100 million annually for individual production plants within the park, and with a net cash position of RM205.9 million, funding constraints are not anticipated.
Diversifying Product Portfolio and Market Reach
This strategic expansion aims to broaden the company’s product mix beyond its traditional surimi-based offerings to include products derived from soy, chicken, and flour. This diversification aligns with growing consumer demand for convenient, protein-rich ready-to-eat food products and is expected to drive downstream value addition and innovation across both retail and foodservice channels. The project is also poised to expand both domestic and export market reach, addressing current utilization levels that are already near capacity.
Outlook and Challenges
While the long-term strategic benefits are clear, analysts from PublicInvest Research maintain their forecasts for now, anticipating no significant earnings impact during the construction period. However, they highlight potential cost increases in fiscal year 2028 due to depreciation charges, and note that optimal utilization levels will take time to achieve. The investment bank reiterates its “Neutral” call on the company with an unchanged target price of RM4.50, pending clearer visibility on the commissioning schedule and ramp-up in utilization rates.
