Company Background. Teo Seng Capital (Teo Seng) is an integrated layer farming company in Malaysia. Its core business comprises of feedmill, paper egg tray, animal health products, egg processing and fertiliser. Teo Seng’s business divisions are categorised into 2 segments: poultry farming and investment/trading of other poultry related products. Currently, the group has 24 farms and 3 distribution centers located in Peninsular Malaysia.  

Prospects. (i) Enhance factory automation process by upgrading existing farm facilities and equipment to achieve a daily chicken egg production of 4.5mil eggs by FY24 (currently 4mil daily eggs production), (ii) Invest in solar panel systems across farms and factories for renewable energy generation and cost saving, and (iii) Expand the customer base through distribution centres in key regions and introduce new downstream products such as boiled eggs and processed old hen products.  

Financial Performance. In 1QFY23, Teo Seng reported higher revenue of RM183.4mil (+24.5% YoY) with a PAT of RM19.7mil (+4.7x YoY). This was attributed to improved selling prices of eggs, increase in sales volume of eggs, higher sales of old hens and sustainable profit contribution from animal health product segment.  

Technical Analysis. Teo Seng may trend higher after it closed above the RM0.90 psychological mark a month ago. As the stock has posted a long white candle and climbed to a new 52-week high yesterday, a bullish outlook can be anticipated here. A bullish bias may emerge above the RM0.90 level, and the bullish momentum should lift it towards the subsequent resistance level of RM1.05, followed by RM1.10. Towards the downside, stop-loss is set at RM0.86, below the 50-day EMA.

Source: AmInvest Research - 6 Jul 2023