There are joker, he said buy buy buy , then teoseng wash abit , he cannot tahan and sell off all his stock , and deleted comment. Now teoseng naik back , he tekan his eggs until pecah.
*Teo Seng Capital Meeting Note Takeaway* _(TSCB MK, NOT RATED, FV: MYR2.19)_
♦️ *Continue to collect government subsidy smoothly.* About 65% of their total egg production is subjected to ceiling price and subsidies. TSCB expects to receive higher amount of subsidy from government in 4Q23 in tandem with higher number of months of subsidy being collected and higher sales from higher daily egg production. We expect a 10-15% effective tax rate for FY23. As the Group has recognized its subsidy up to May in 3Q23, we expect the Group continues to claim the outstanding FY23 subsidy from government in near term and recognize the subsidy income until 1H24.
♦️ *Sustainable topline in near term.* Q4 is usually its strongest quarter due to stronger buying behavior on festive season. Hence, the management thinks that its sales volume can be improved in Q4 together with its higher daily egg production from continual upgrade of its chicken farms. The management does not see much fluctuation of egg ASP and feed cost prices remain relatively lower than YTD's peak. The management is optimistic on the YoY improvement of sales volume at least until 1H24.
♦️ *Malaysia biggest egg exporter to Singapore.* As of 9M23, TSCB is exporting about 23% of its total egg production to Singapore, which commands higher margin. The Group is working hard in launching downstream products in eggs to export more to Singapore including hard-boiled eggs, soft-boiled eggs and herbal eggs. The downstream products are currently taking up 0.7% of its total egg production and expect it to increase to 1% in next FY.
♦️ *Margin expansion with improved efficiency.* With food security concern on food hygiene and prevention of diseases, TSCB is the first egg producer in Malaysia who adopted All-in-all-out system in a closed-house system since 1999. Without resting on its laurels, TSCB invested in implementing automation system into its integrated layer farming operational process. This includes auto feeding system, modern layer cage system, automated egg collecting system, nipple drinking system, air-conditional environment, smart system for feeding, ventilation and lighting as well as automated chicken manure belt (to produce organic fertiliser). These are to ensure the quality of egg produced and increase efficiency by reducing manual workers. When old bird house was torn down and replaced with a new double storey bird house, the no of bird capacity for the same floor size will increase from 25k to 80k birds. With the hard work from years of production system improvement, TSCB is now starting to reaping the fruit from better efficiency and higher margin business with its eco-system. On the other hand, the Group is also gradually shifting its local wholesale sales to local direct sales which command higher margin.
♦️ *Awaiting for Govn announcement.* In Oct 2023, government targets to uplift the ceiling price of eggs in January 2024. However, we have not heard anything from the Government till now. Management expects to hear something from government in mid Jan on whether to continue subsidy and price control program or allow free market. From our ground check, most egg producers prefer free market due to better cash flow and flexibility to adjust egg prices based on costs movement.. In our view, even when free market comes into play, egg as the cheapest source of protein and deemed as necessities, is relatively price inelastic. Coupled with industry consolidation, high investment costs, & increasingly stringent regulatory requirements, the Group can still remain profitable until 1H24. Another point that distinct egg sellers from chicken sellers is that egg has much shorter shelf life of say 30 days compared to chicken (frozen chicken can last up to6 months). Hence, Malaysia egg consumption is highly dependent on local egg producers rather than importers.
♦️ *Undervalued stock.* With the latest quarter result announced, we think the stock is currently trading at just 3.8x vs its peers' trading P/E of 8.3x (Figure 12). In the event that TSCB managed to register higher EPS in the subsequent quarter, Its trading P/E will be pared down even further. Its high dividend yield of >6% in FY23F and FY24F makes it a compelling investment.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Oratan
17 posts
Posted by Oratan > 2023-12-26 15:39 | Report Abuse
share price drop because of LHI Macc case?