TEOSENG: Poultry Producer’s FY25 Results Within Expectations on Operational Efficiencies

A leading poultry producer has reported its financial year 2025 (FY25) results to be within expectations, primarily driven by higher sales volume and improved operating expenses (OPEX). Despite facing headwinds from lower average selling prices of eggs and the full removal of government subsidies, the company demonstrated resilience in its operations.

Performance Review

The company’s topline saw a modest decline of 2.4% year-on-year (YoY) to RM735.9 million in FY25. Net profit, however, decreased by 22.5% YoY to RM142.1 million, largely attributable to the softer average selling prices of eggs and the cessation of government subsidies since August. While the poultry farming segment experienced a 3.5% YoY contraction, the investment and trading of poultry-related products segment registered a 4.2% YoY growth.

On a quarter-on-quarter (QoQ) basis, the fourth quarter of FY25 (4QFY25) saw topline revenue fall by 3.6% from 3QFY25. However, a notable improvement in profitability was observed, with Profit Before Tax (PBT) surging 32.2% QoQ to RM42.9 million, and core earnings jumping 32.3% QoQ to RM33.5 million. This robust QoQ performance was underpinned by stable feed costs and higher selling prices of eggs, benefiting from the Ringgit’s appreciation which aided raw material sourcing.

Future Outlook and Recommendation

Looking ahead, the complete removal of government subsidies is expected to significantly impact the company’s core earnings in FY26E and FY27E, reflecting a return to normalised earnings. Nevertheless, the outlook remains positive due to anticipated increasing demand for eggs, stable feed prices, continued downstream expansion, and the strength of the local currency, which are expected to support the company’s performance.

Following these results, analysts have raised their FY26E/FY27E earnings estimates by 4%, citing growing demand for eggs, stable feed prices, and improving gross profit margins and OPEX. The long-term investment case for the producer is strengthened by resilient market demand for eggs, vertically integrated operations, downstream expansion growth, and an improving macro-economic environment.

Risks to the outlook include potential poultry diseases, feed and forex volatility, and softer average selling prices of eggs. However, given the overall positive operational trajectory and future growth drivers, the investment bank reiterates a BUY recommendation, setting a target price of RM0.25, representing a 25.0% upside from the last traded price of RM0.20.