KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest) is positive on QL Resources Bhd's business operations as its growth prospects will be driven by the palm oil and clean energy (POCE) and convenience store chain (CVS) segments.
The firm expects this to be supported by more clean energy projects from BM Greentech and the opening of new Family Mart outlets.
"However, we foresee slower earnings growth in the financial year 2025 (FY25) forecast, coming off a high base in FY24 and a normalisation in earnings from the marine product manufacturing (MPM) and integrated livestock farming (ILF) segments," it said in a note.
As such, PublicInvest has maintained a "neutral" call on QL Resources, with an unchanged target price of RM6.85.
It believes that the positives from the group's business operations have been priced-in following the recent run in its share price.
In terms of the group's MPM segment, PublicInvest expects contributions from
fishmeal and surimi activities to remain muted at a weaker selling price given the greater competition from international players (Peru, India, Thailand, and Russia).
However, it said the increase in production capacity for surimi-based products from the newly commissioned plant (PT Hasil Laut) in Indonesia, should help to offset the weaker performance from other business activities within the segment.
On the group's ILF segment, it expects earnings growth to normalise from the high base effect recorded in FY24 and the challenging outlook from its Indonesia and Vietnam operations due to weak prices.
Nevertheless, the firm said Malaysian operations should remain stable, thanks to the egg cost subsidy and stabilising commodity prices.
Meanwhile, PublicInvest expects the group's POCE segment to chalk up better earnings going forward, underpinned by increasing clean energy projects and turnarounds in project margins.
"We believe that as Tera (BM Greentech's wholly owned subsidiary) is one of the top 5 solar rooftop players in Malaysia, it should benefit from the government's initiatives to focus on renewable energy," it noted.
The firm also remains optimistic about the group's CVS segment on the back of new store openings, better consumer spending from EPF Account 3 withdrawals, and a civil servant salary hike.
As of March 2024, QL has 395 FamilyMart outlets and a total of 102 FamilyMart Mini kiosks.
"We understand that QL plans to open 60–90 new stores in FY25 and will focus on opening more new outlets on the East Coast.
"The group remains committed to opening 600 stores by 2027," it said.