Lay Hong’s FY18 core net profit of RM38.2m (+109.3%) came in within our expectation, accounting for 101% of our forecast. 4QFY18 core net profit jumped 99.2% to RM10.5m, mainly on the as weaker performance at retail supermarket division was more than compensated by higher contribution from integrated livestock farming segment. as weaker performance at retail supermarket division was more than compensated by higher contribution from integrated livestock farming segment.

Within expectation. 4QFY18 core net profit of RM10.5m (qoq: +3.4%; yoy: +99.2%) took FY18 core net profit to RM38.2m (+109.3%). The results came in within our expectation, accounting for 101% of our forecast.

QoQ. Although revenue declined by 1.6% to RM224.6m (due mainly to seasonal factor), 4QFY18 core net profit inched up marginally, by 3.4% to RM10.5m and this was due mainly to lower operational expenses.

YoY. 4QFY18 core net profit doubled to RM10.5m (from RM5.3m a year ago), as weaker performance at retail supermarket division was more than compensated by higher contribution from integrated livestock farming segment (arising from higher egg sales volumes, higher quantity of processed frozen products and pasteurised liquid eggs).

YTD. FY18 core net profit more than doubled to RM38.2m (from RM18.2m a year ago), and this was boosted mainly by higher contribution from integrated livestock farming segment (arising from higher egg sales volumes, higher quantity and price of processed frozen products and pasteurised liquid eggs).

Forecast. Maintain.

Maintain BUY, TP: RM1.24. Maintain BUY recommendation with unchanged SOP derived TP of RM1.24. We continue to like Lay Hong for its exciting earnings growth prospects, underpinned by its expansion plan (at the upstream segment) and tie-up with NH Foods (which allows Lay Hong to expand its market reach by leveraging on NH Foods’ wide geographical network).

Source: Hong Leong Investment Bank Research - 30 May 2018