| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Performance Review
Core earnings for the first quarter of fiscal year 2026 (IQFY26) reached RM32.1 million, significantly exceeding consensus estimates by 39% and aligning comfortably within 27% of the full-year projection. This robust performance was underpinned by a 4.1% year-on-year (YoY) increase in revenue, which climbed to RM617.8 million. On a quarter-on-quarter (QoQ) basis, core earnings saw a substantial surge of 66.8%, demonstrating strong sequential growth.
Key Drivers
The impressive financial results were primarily driven by a combination of strategic initiatives and favorable market dynamics. Higher feed sales from recently acquired subsidiaries, contributing approximately RM21.9 million, alongside contributions from two new retail outlets, bolstered the company’s top line. Crucially, cost efficiencies played a significant role, with feed costs declining by 6.5% YoY, leading to improved margins in the fast-food segment. Quarter-on-quarter, the company benefited from higher average selling prices (ASPs) for broilers, which rose 15% to RM6.21/kg, and chicks, which increased by 7%. Furthermore, a 2% reduction in feed costs compared to the previous quarter contributed to the expanded Gross Profit (GP) margin, which grew by 4.6 percentage points to 14.2%.
Future Outlook and Expansion
The group’s future prospects appear promising, with a new processing plant in Nibong Tebal slated to commence operations in 2QFY26. This expansion is critical as the existing facility is currently operating at near full utilization, and the new plant is expected to boost total food production capacity by 150% to 2,500 tonnes per month, enabling the company to meet strong market demand. The overall FY26 outlook remains robust, supported by the internalisation of feedmill production to enhance margins, expanded food processing capacity, planned supermarket expansion, and continued growth in the Indonesian market.
Investment Recommendation
TA Securities has maintained its “BUY” recommendation for the stock, signaling continued confidence in its growth trajectory. The investment bank has revised its target price (TP) to RM0.25, representing a potential upside of 25.0% from the last traded price of RM0.20. This valuation is based on an updated valuation base year to CY27, pegged to 5x CY27 EPS.
