Stock Name: QL
Company Name: QL RESOURCES BHD
Research House: RHB

KUALA LUMPUR: QL RESOURCES BHD [] share price rose on Monday, Oct 25 after RHB Research Institute Sdn Bhd maintained its outperform call on the stock and raised its target price to RM5.50 from RM5.41 previously.

At 9.50am, QL was up four sen to RM5.12 with 2,000 shares traded.

In a note on Monday, RHB Research said QL was in the midst of constructing its 13ha Breeder and 17 hectare Layer plant in Cianjur district, located approximately two hours from Jakarta.

The plant is expected to contribute 12 million day old chicks per year by end FY11, and one million eggs per day by end FY12.

Similarly in Tay Ninh, Vietnam, QL started CONSTRUCTION [] on its egg plant in May of this year. The plant is expected to produce 500,000/eggs per day by end FY12, with similar margins as Malaysia, ie 24 sen-25 sen/egg selling price and about 7%-8% in PBT margins.

For its MPM division, QL is expecting to complete Phase 1 of its new plant in Surabaya, Indonesia by March 2011.

The Surimi and Fishmeal plant is situated on a 10 hectare land, and the overall cost would be around RM30 million-RM35 million. With capacity of 5,000 tonnes of Surimi and 5,000 tonnes of fishmeal, the plant will increase QL's current capacity by 20%.

QL has finished planted 8,500 hectares of land in Eastern Kalimantan around the middle of this year. By FY13, the group aims to finish planting 15,000 hectares.

The 8,500ha that was planted is expected to mature in FY13, thus doubling its production from FY12.

"After tweaking our ILF assumptions, our FY12-13 earnings are thus lifted by 2-6%. Our fair value is raised slightly to RM5.50 (RM5.41 previously) based on unchanged target 16x CY11 EPS. Maintain Outperform," it said.