Company Update

• We met up with Teo Seng Capital Bhd’s (TSCB) management recently on the updates of the group’s current operations and future expansion plans moving into 2020. We remain convinced that the group is largely on track to meet the targeted production of 5.0 mln eggs per day by end-2022. The move will be supported by its long term expansion plans that revolve around the layer farming upgrades and expansion.

• TSCB currently owns 24 farms (8 pullets and 16 layers) that have the capacity to house 5.5 mln birds. As of end-November 2019, TSCB is producing up to 4.0 mln eggs per day, gradually rising from 3.0 mln eggs per day since 2015. We note that 40% of TSCB eggs are exported (33% to Singapore and remainder 7% to Hong Kong and Macau).

• Moving forward, TSCB aims to export 35% of its daily egg production to Singapore and seeks to increase the number of distributors to market its eggs in Macau and Hong Kong. In the meantime, the group will add a new central packaging station to complement its existing two stations that have a total grading capacity of 600,000 eggs per hour.

• Meanwhile, the group has re-iterated its commitment to its dividend distribution and while TSCB does not adopt a formal dividend policy, the group has distributed 20%-50% of its net profit to shareholders every year, with the exception in 2017. We have imputed a dividend per share of 5.5 sen for 2020, translating to a decent dividend yield of 4.1%.

Source: Mplus Research - 3 Dec 2019