Malaysia Stock Analysis – TeoSeng (7252)

TeoSeng is one of the largest and integrated egg producers in Malaysia. Its core business activities involve the production of eggs, the manufacture and trade of paper egg trays. From 100,000 eggs a day to 3.8 million eggs a day.

All farms are in Johor, Malaysia, using the internationally recognized system All-In-All-Out (“AIAO”) feeding system. Eggs are still the core product and the most economical source of protein.

In addition to traditional commercial eggs, a series of healthy and hygienic eggs have been launched under the “Happy Egg” brand to explore the market for buyers who need higher nutrition.

Overseas markets account for 40% of their business sources, mainly selling to Hong Kong and Singapore. Occupying 8% market share in Peninsular Malaysia, Singapore has a 19% market share. And also their small of business - animal health products sector is progressing rapidly, but it does not make much profit for the company.

TeoSeng allocated RM46 million in fiscal year 2018 to improve existing farm facilities and equipment to expand business. The capital expenditure includes an investment in the new central packaging station, which is expected to be completed by the end of 2019; Increase in farm capacity and replacement of aging farms still account for the majority of planned capital expenditures

In 2019, the company will complete the adoption of automated systems to maintain competitiveness and reduce dependence on foreign workers' supply and reduce operating costs.

The company has transformed hen houses and the production capacity of hens has increased by 150,000. With the upgrade and expansion of the hen and laying hen houses, the company's average daily egg production increased to 3.8 million.

The new Central Packaging Station ("CPS") is under construction and is expected to be completed by the end of 2019. The second fertilizer plant is operating, this business is not just to create new sources of revenue, but more importantly a sustainable comprehensive solution to alleviate the enormous amount of productivity and environmental problems. In addition, in 2018, the expansion of the egg paper tray production finished goods warehouse was completed.

The growth of the company's product demand is directly proportional to the growth of population. The increasing of population will be direct impact on thier company's business.

The eggs produced by the company occupy 8% of the market in Malaysia and 19% in Singapore. Company customers are mainly divided into four categories: wholesalers/supermarkets/manufacturers and retailers.

The company has two subsidiaries mainly producing quality eggs in Singapore, the company name Premium Egg Products Pte.Ltd. & BH Fresh Food Pte.Ltd. The company has strong diplomatic skills and continues to expand its business territory to other countries and markets.

The company expects egg prices and feed costs to be very optimistic within this year 2019. And the company is vigorously promoting their high-quality eggs to do more brand promotion to increase market share.

Louis Yap

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