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CGS-CIMB Is 'double Overweight' on Construction Sector on Govt Policy Continuity
Source : CIMB, Price Call : BUY, Price Target : 1.91
Last Price : 1.55, Upside/Downside : +0.36(23.23%)

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Stock: [LHI]: LEONG HUP INTERNATIONAL BERHAD

2023-11-07 12:29 | Report Abuse

KUALA LUMPUR (Nov 7): Hong Leong Investment Bank (HLIB) maintained its “buy” call on Leong Hup International Bhd at 66 sen, with a higher target price (TP) of 73 sen, as it sees strong earnings going into the second half of the financial year ending Dec 31, 2023 (2HFY2023), supported by stable demand, more balanced supply-demand dynamics in key operating countries, and lower feed prices.

In a note on Tuesday, HLIB said poultry prices had come marginally above the previous ceiling price of RM9.40/kg, due to stabilised supply and lower feed prices like soybean meal and corn, following the removal of subsidies and the price ceiling effective from Nov 1, 2023.

Despite the absence of subsidies and lower poultry prices, the research house believes Leong Hup’s livestock segment in Malaysia will remain profitable in the near term, supported by lower feed prices and stable demand.

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Yet, it believes that the poultry price volatility in Malaysia will remain low, given accelerated industry consolidation in the past, which resulted from the Covid-19 pandemic and heightened commodity prices in 2022.

The research house added that the turnaround in the company's Indonesian operations that began in the second quarter ended June 30, 2023 (2QFY2023) is expected to continue through the next two quarters.

This sustained improvement is attributed to a more balanced supply and demand situation in the market, which is a result of recovering demand and reduced pricing competition from major industry players.

Similarly, the contribution from Singapore, which has been on the rise since 4QFY2022, is expected to be maintained or even improve in 2HFY2023, as Leong Hup had gradually increased its selling prices to its contract customers to reflect higher production costs in FY2022.

Furthermore, earnings from Singapore are expected to benefit from both the higher selling prices and the removal of the export ban on broiler chickens to Singapore effective from July 2023.

Overall, HLIB is optimistic about Leong Hup, given its bright near-term earnings prospects.

“Key risks include a sudden spike in feed prices, intensified industry competition, and escalating food inflation, which will affect consumption of poultry products," the research house added.

At the time of writing on Tuesday, Leong Hup was trading at 66 sen a share, translating into a market capitalisation of RM2.39 billion.

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Stock: [YTL]: YTL CORPORATION BHD

2023-11-06 14:27 | Report Abuse

Nothing venture, nothing have 🤜🤛

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Stock: [YTLPOWR]: YTL POWER INTERNATIONAL BHD

2023-11-06 14:25 | Report Abuse

Nothing venture, nothing have 🤜🤛

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