Kenanga Research has upgraded QL Resources Bhd to an “Outperform” recommendation with an unchanged TP of RM6.00 based on FY23E PER of 44x in line with its 5-year mean.
It believes that it is justified, premised on its resiliency and robust earnings growth potential from diversified revenue streams. “Given the sharp price weakness, we upgrade the call to OUTPERFORM,” it said.
Kenanga said that while valuation appears rich at this level, we believe it is justified, premised on its resiliency and robust earnings growth potential from diversified revenue streams.
It said that 2HFY22 looks to be improving as the group’s earnings are expected to be anchored by its MPM segment (historically taking up c.66% of group PBT), on the back of; stable fish cycle, coupled with persistently robust sales momentum, especially from the frozen surimi-based products.
It said that MPM activities are historically lower in the 4Q of the financial year (due to monsoon) but we expect improvements ahead provided no further resurgence of the pandemic.
Kenanga said that POCE should see a better 2H with operations and site installation resuming coupled with a higher FFB production seasonally in the third quarter. However, IFL’s improvement will be offset by high feed costs.
