Review

• QL Resources Berhad’s (QL) 4QFY24 results came in within expectation. Core earnings increased 34.6% YoY to RM98.7mn, in tandem with 13.7% growth in revenue.

• Cumulatively, FY24 core earnings of RM437.8mn (+26.2% YoY) came in at 100% and 101% of ours and the market’s full-year estimates. Revenue rose 6.6% YoY to RM6.7bn. The better earnings were underpinned by improvement from all segments.

• MPM Segment. FY24 PBT rose 13.9% YoY to RM275.8mn while revenue increased by 2.6% YoY to RM1.4bn. The growth was attributed to the improved margin for fishmeal and surimi-based products as a result of better fish landing and higher export prices.

• POCE Segment. Segmental revenue registered at RM676.3mn (+12.5% YoY) and PBT stood at RM64.3mn (surged by more than 5-fold YoY). The commendable results were driven by better sales of Boilermech with higher project progress, disposal gain from the Tawau palm oil mill, and higher plantation productivity.

• ILF Segment. Segmental revenue rose marginally by 2.3% YoY to RM3.5bn due to lower unit prices for feed raw material trading. FY24 PBT jumped 24.2% YoY driven by the recovery in Indonesia operations and the strong performance of Malaysia farming operations, supported by the egg subsidy.

• CVS Segment. The revenue grew by 25.7% YoY following the increase in operating stores and better average sales per store. Meanwhile, earnings rose by 34.9% YoY to RM59.0mn due to higher sales per store coupled with cost optimisation efforts.

• The group proposed a final interim dividend of 3.5sen/share, bringing the YTD DPS to 6.5sen/share (FY23: 7.0sen/share).

Impact

• We adjust our FY25//FY26 earnings upwards by 2.4%/2.8%, respectively after inputting FY24 figures.

Outlook

• Consumer sentiment is going to benefit from the implementation of a new civil servant wage structure and flexible withdrawal of EPF account 3.

• Therefore, management is cautiously positive that FY25 will remain resilient driven by cost optimisation, new openings of convenience stores, and investment in production capacity.

Valuation

• Reiterate Buy with a revised DCF-driven TP of RM7.40/share (k: 6.4%; g: 3.0%) after we roll forward our valuation to CY25.

Source: TA Research - 31 May 2024