Navigating the Headwinds: A Closer Look at LAY HONG BERHAD’s Q1 FY26 Performance
Greetings, fellow investors and market enthusiasts! Today, we’re diving into the latest financial pulse of LAY HONG BERHAD, a familiar name in Malaysia’s integrated livestock and food manufacturing sectors. The company has just released its unaudited results for the first quarter ended 30 June 2025, and it presents a mixed bag of progress and challenges that warrants our attention.
While the first quarter saw a slight dip in overall revenue and profit before tax compared to the same period last year, there are crucial underlying trends and strategic shifts at play. Notably, the company showcased robust operational cash flow generation, a key indicator of its financial resilience. So, let’s unpack these numbers and understand what they mean for LAY HONG BERHAD’s journey ahead.
Financial Performance Overview: A Mixed Quarter
LAY HONG BERHAD’s Q1 FY26 financial report highlights a quarter of recalibration. Despite a challenging market landscape, the company’s core operations remain largely stable, though with some segments performing better than others. Let’s look at the headline figures for the individual quarter ended 30 June 2025, compared to the same period last year:
Q1 FY26 (30 June 2025)
Revenue: RM 266,081k
Profit Before Tax (PBT): RM 13,650k
Net Profit After Tax: RM 11,280k
Earnings Per Share (Basic): 1.47 sen
Q1 FY25 (30 June 2024)
Revenue: RM 273,824k
Profit Before Tax (PBT): RM 15,587k
Net Profit After Tax: RM 13,752k
Earnings Per Share (Basic): 1.78 sen
Overall, LAY HONG BERHAD reported a total revenue of RM266.08 million for the first quarter, marking a modest 2.83% decrease from RM273.82 million in the corresponding quarter last year. This translated to a Profit Before Tax (PBT) of RM13.65 million, a 12.43% decline from RM15.59 million previously. Consequently, basic Earnings Per Share (EPS) saw a reduction from 1.78 sen to 1.47 sen.
This dip in profitability, despite including government subsidies received during the period, signals the challenging operating environment. However, a deeper dive into the segment performance reveals a more nuanced picture.
Business Unit Performance: A Closer Look
LAY HONG BERHAD operates through three main segments: Integrated Livestock Farming (ILF), Food Manufacturing (FM), and Retail Business (RB). Each played a distinct role in the quarter’s overall performance:
Integrated Livestock Farming (ILF)
Q1 FY26 Revenue: RM 201,758k
Q1 FY25 Revenue: RM 198,163k
The ILF segment, the backbone of LAY HONG BERHAD, showed resilience with revenue increasing by 1.81% (or RM3.60 million) to RM201.76 million. This growth was primarily driven by the higher quantity of live chickens and eggs sold, indicating steady demand in this essential sector.
Food Manufacturing (FM)
Q1 FY26 Revenue: RM 141,802k
Q1 FY25 Revenue: RM 151,304k
The FM segment faced tougher competition, leading to a 6.28% decrease (or RM9.50 million) in revenue, settling at RM141.80 million. This was attributed to a decline in sales quantity for both primary and further processed poultry products, underscoring the fierce competitive landscape in the food processing industry.
Retail Business (RB)
Q1 FY26 Revenue: RM 60,275k
Q1 FY25 Revenue: RM 58,593k
A positive note comes from the Retail Business, which saw its revenue climb by 2.87% (or RM1.68 million) to RM60.28 million. This growth is a direct result of the successful opening of additional new stores, expanding LAY HONG BERHAD’s market reach and consumer access.
Financial Health and Cash Flow
Beyond the income statement, a peek into the balance sheet and cash flow statement provides insights into the company’s financial robustness.
Statement of Financial Position (as at 30 June 2025 vs 31 March 2025)
| Indicator | 30 June 2025 (RM’000) | 31 March 2025 (RM’000) | Change |
|---|---|---|---|
| Total Assets | 1,122,309 | 1,099,236 | +RM23,073k |
| Total Equity | 666,735 | 655,358 | +RM11,377k |
| Total Liabilities | 455,574 | 443,878 | +RM11,696k |
| Net Assets per Share (RM) | 0.86 | 0.85 | +RM0.01 |
The company’s total assets grew to RM1.12 billion as of 30 June 2025, up from RM1.10 billion at the end of the last financial year. This growth was mirrored by an increase in total equity to RM666.74 million, signifying a strengthening of the company’s financial base. Net assets per share also saw a slight uptick from RM0.85 to RM0.86.
Cash Flow from Operations (Cumulative Quarter ended 30 June 2025 vs 30 June 2024)
Perhaps one of the most encouraging signs comes from the cash flow statement. LAY HONG BERHAD generated a net cash of RM27.15 million from operating activities for the quarter, a substantial improvement from RM14.98 million in the same period last year. This demonstrates the company’s ability to convert its operations into solid cash, which is crucial for funding investments and managing debt. While investing activities saw more cash used (RM21.54 million), this largely funded the purchase of property, plant and equipment, indicating ongoing capital expenditure for growth.
Risks and Prospects: Looking Ahead
The future for LAY HONG BERHAD presents both opportunities and potential headwinds. The company’s outlook is cautiously optimistic, underpinned by specific market dynamics:
Opportunities
- Stable Raw Material Prices: The report highlights that the prices of raw materials continue to be stable. This is a significant positive factor, as it helps the company manage its cost of sales, which is vital for maintaining profit margins, especially in the ILF segment.
- Retail Expansion: The growth in the Retail Business, driven by new store openings, provides a direct avenue for market expansion and consumer engagement.
Potential Risks
- Cessation of Egg Subsidy: A key policy change is the cessation of the egg subsidy since 1st August 2025. This could put pressure on the ILF segment’s profitability if market prices do not adequately adjust to cover production costs.
- Relaxation of Egg Price Control: The control price of eggs is expected to be relaxed by the end of August 2025. While this could potentially allow for market-driven pricing, it also introduces an element of uncertainty regarding price volatility and consumer demand responsiveness.
- Intense Competition in Food Manufacturing: The Food Manufacturing segment continues to face “higher competition,” leading to reduced sales quantities. This requires continuous innovation and efficiency improvements to maintain market share.
Given these factors, LAY HONG BERHAD anticipates its financial performance to continue performing satisfactorily in the coming months, buoyed by the stable raw material prices.
Summary and Investment Recommendations
LAY HONG BERHAD’s first quarter results reflect a company navigating a dynamic market environment. While headline revenue and profit show a slight contraction, the underlying strength in operational cash flow and the targeted growth in the Integrated Livestock Farming and Retail Business segments are encouraging. The stability of raw material prices is a significant tailwind for the company’s cost management.
However, stakeholders should closely monitor the implications of the cessation of egg subsidies and the impending relaxation of price controls. These policy shifts could introduce new challenges and opportunities for the Integrated Livestock Farming segment, requiring agile responses from the management. The ongoing competition in the Food Manufacturing sector also remains a key area for strategic focus.
Key points from the report that warrant attention:
- Overall revenue and PBT saw a decline compared to the same quarter last year, reflecting a challenging operating landscape.
- The Integrated Livestock Farming (ILF) segment showed growth due to higher sales volume of live chickens and eggs.
- The Food Manufacturing (FM) segment faced headwinds from increased competition, leading to a decrease in sales.
- Retail Business (RB) revenue increased, thanks to new store openings.
- Operating cash flow demonstrated significant improvement, indicating strong underlying business operations.
- The cessation of egg subsidies and the upcoming relaxation of price controls for eggs are significant factors for the ILF segment moving forward.
- Stable raw material prices are expected to support satisfactory performance in the near future.
Your Thoughts?
LAY HONG BERHAD continues its journey in a competitive and evolving market. The company’s ability to generate strong operational cash flow despite the revenue dip is a testament to its operational efficiency. However, the upcoming changes in the poultry industry’s regulatory landscape will be crucial to observe.
What are your thoughts on LAY HONG BERHAD’s ability to adapt to the upcoming changes in egg pricing and subsidies? Do you believe their retail expansion strategy will be enough to offset the challenges in food manufacturing? Share your insights in the comments section below – let’s discuss!
For more in-depth analyses of Malaysian companies and market trends, be sure to explore our other recent articles on [Link to Related Article 1] and [Link to Related Article 2].
