Among the consumer-related players in the country, QL Resources is riding on borders reopening, both in Malaysia and China as all areas of its business are seeing strong recovery. Its marine products enjoy brisk exports (especially to China) on the heels of its reopening as well as the MYR’s weakness against the USD. Meanwhile, rising income and living standard trends will drive demand for its poultry products in Vietnam and Indonesia.
Meanwhile, the company is also on track to achieve its target of 600 Family Mart stores and Family Mart Mini (FMM) stores each in Malaysia by 2027.
QL reiterated its expansion plans for its marine products division comprising increasing its marine prawn aquaculture production capacity to 6k MT (from 2k MT) predominantly in Sabah with RM80m annual capex until 2026, and building a new state-of-the-art surimi production plant in Malaysia with a capex of RM400m by 2027. In Surabaya, Indonesia, a surimi production plant is on target for completion by 1QCY24 with a 12k MT capacity. Demand is expected to recover with the resumption of exports to China and normalised production with the arrival of new migrant workers.
Prepandemic, its marine exports were evenly spread over North America, Japan, Singapore, Korea, and China which is looking to catch up with the easing of restrictions.
As for its poultry business, the current overall daily egg production is at 7.75m which is on track to achieve its target of 9 million eggs per day by 2026. The expansion mostly comes from Indonesia and Vietnam. On its geographical eggs production breakdown – Peninsular and East Malaysia produce 5 million eggs/day (or 64%) with Vietnam at 1.8 million eggs/day followed by Indonesia at 0.95 million eggs/day. Vietnam is targeting 2m epd by 2024 while Indonesia has set a target of 1.4m epd by 2026. Egg prices have seen a jump of 20% in both Indonesia and Vietnam with the absence of price control. The markets there are expected to see higher demand corresponding with the improvement in living standards. PBT margin currently stands at 4% (from 1% a year ago).
The company reiterated its target of adding another 300 FM stores (as of Dec 2022 – 335 stores) by 2027. Normalisation of business activities reinforces its target completion by then which also includes 300 Family Mart Mini (FMM) stores (from about 300 at present). QL told Kenanga its set-up of FMM remains the same – located at highways, petrol stations, and residential high-rises. By end of 2023, the group plans to have 96 FMM units (from 50 in Jul 22). Moving forward, the additional FM stores will mostly be in suburbs due to cheaper rent and the availability of local workers.
Currently, there are only 6 FM stores on the East Coast but it said there have been requests by state authorities in Kelantan and Terengganu for Family Mart to open there. While FMM units have been averaging RM600/700 sales per day (from RM600), sales from FM stores average RM6-7k/day (from its RM8k/day target) due to weaker consumer spending power hit by inflationary pressure.
