As concerns over the safety of marine life escalated following Japan's recent discharge of nuclear wastewater into the Pacific at the end of August, many individuals refrained from consuming seafood. Consequently, several countries shifted their seafood imports towards Southeast Asia, including Vietnam, Indonesia, and Malaysia.

One of Malaysia's seafood export companies, PT Resources Holdings Berhad (PTRB, 0260), recently announced outstanding quarterly performance, reaching a record profit. Before delving into the financial results, let's briefly understand PTRB.

According to the 2023 annual report, PTRB was founded in 2012 and headquartered in Kuantan, Pahang. The company primarily engages in the processing and trading of frozen seafood products as well as retail trading of meat and non-meat products.

Speaking of its retail business, PTRB has well-established online and offline sales channels, including eight MO Foodmart stores in the Pahang and Terengganu regions. Furthermore, the company operates a large wholesale center, MO Wholesale Centre, in Pahang. PTRB also runs its online platform, MO Signature, selling seafood, meat, and non-meat products.

The majority of PTRB's revenue is derived from processing and selling frozen seafood products, accounting for approximately 93.89% of the total revenue in the fiscal year 2023. The remaining income comes from retail trading in halal meat, vegetables, fruits, beverages, and other products.

PTRB's business footprint extends to the Asia-Pacific region and Western Asian countries, including the Philippines, Saudi Arabia, China, Indonesia, and Middle Eastern nations.However, the primary market revenue still originates from Malaysia, constituting about 51.89% of the fiscal year 2023 revenue, followed by China (45.72%), Saudi Arabia (2.06%), the United Arab Emirates (0.18%), Indonesia (0.09%), and Singapore (0.06%).

By the way, PTRB was listed on the ACE Market of Bursa Malaysia on September 27 last year.

Revenue Comparison (YoY -10.90%, QoQ -15.14%)

As of October 31, 2023, the company's revenue stood at approximately RM111.70 million, reflecting a decrease of around 10.90% compared to the same period last year (RM125.37 million). This decline is mainly attributed to a significant drop in overseas sales, particularly from China, decreasing by approximately RM24.84 million year-on-year. However, sales in Malaysia and other countries showed year-on-year growth.

Specifically, revenue from Malaysia increased by about RM69.59 million, a year-on-year growth of 4.83%. Saudi Arabia and other countries* contributed approximately RM6.84 million and RM5.66 million, with year-on-year growth of approximately 65.92% and 1247.61%, respectively. As mentioned earlier, market revenue from China decreased by about 45.62% to around RM29.60 million.

*Other countries include Indonesia, Thailand, Singapore, and the United Arab Emirates.

Similarly, compared to the previous quarter, the company's revenue decreased by approximately RM19.94 million or 15.14%, primarily due to weakened overseas sales demand from China.

Net Profit Comparison (YoY +124.22%, QoQ +298.72%)

Despite the decline in revenue, PTRB achieved a net profit of approximately RM18.70 million in the current quarter, representing a year-on-year increase of about RM10.36 million and a quarter-on-quarter increase of around RM14.01 million. This was attributed to the company's effective procurement strategy of bulk purchasing from suppliers to obtain more favorable prices or discounts.

As a result, the company's gross profit margin significantly improved this quarter. For reference, the gross profit margin for this quarter is approximately 18.01%, surpassing the 11.06% from the same period last year and the 8.45% from the previous quarter.

Outlook

PTRB will further expand its business in the Chinese and Indonesian markets. The company has also established a processing facility in Fuzhou City, Fujian Province, China, to diversify its product range.

Additionally, PTRB will actively seek new business opportunities or assets that contribute to its financial performance. Meanwhile, the company will continue to monitor the latest market developments and take measures to mitigate any risks to its operations or financial performance.

So, dear readers, what are your thoughts on PTRB, currently trading at a price-to-earnings ratio of approximately 6.63?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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