Teo Seng’s 1Q profit increases due to improved conditions of poultry industry

KUALA LUMPUR (May 15): Teo Seng Capital Bhd’s net profit jumped 373.17% to RM19.68 million for the first quarter ended March 31, 2023 (1QFY2023), compared with RM4.16 million posted a year ago, due to improved business conditions in the poultry sector.

This was on the back of a 24.5% higher revenue for the quarter of RM183.4 million, compared with RM146.36 million for the corresponding quarter a year earlier.

In a press statement on the 1QFY2023 results, Teo Seng said its farming segment’s pre-tax profit improved from RM1.2 million to RM21.4 million for the quarter, driven by improved selling prices of eggs, increases in sales quantities, and higher contributions from sales of old hens.

“The egg subsidy granted by the government cushioned the impact of the continued high feed cost,” said Teo Seng.

The group’s quarterly pre-tax profit stood at RM24.4 million, representing a remarkable growth of 553.5% from a pre-tax profit of RM3.7 million a year earlier, it said in a bourse filing on Monday (May 15).

Besides the farming segment, Teo Seng’s 1QFY2023 results were also supported by a 17.9% increase in pre-tax profit from the investment and trading of poultry-related products segment of RM3.0 million, due to stable demand and sustainable profit contributions during the period under review.

On a quarter-on-quarter (q-o-q) basis, Teo Seng’s revenue increased marginally by 1.5% to RM183.4 million from RM180.6 million for 4QFY2022. However, net profit surged 51% q-o-q due to the same reasons — improved selling prices of eggs and higher sales quantities of eggs.

“Eggs remain an affordable and staple food for households in Asia, and are known as the cheapest source of protein. However, the poultry industry faces market uncertainties, such as high raw material costs, depreciation of the ringgit, and an increase in production cost caused by global inflation,” said Teo Seng.

The group mentioned that challenges posed by food inflation and high costs of raw materials such as maize and soybean continued to impact the poultry industry.

“The board of directors remains vigilant and proactive in implementing strategies to address these challenges, such as expanding the customer base through e-commerce and other diverse marketing channels, as well as new downstream products,” said Teo Seng.

Earnings per share rose to 6.70 sen for 1QFY2023, from 1.42 sen for 1QFY2022. A dividend of two sen per share was declared, with an ex-date of June 7, 2023. To be paid on June 28, 2023, this is the group's first dividend declaration since FY2019.

Teo Seng’s share price slipped 1.12% to 88 sen on Monday, giving it a market capitalisation of RM264.01 million.