FIGURE 1: QL RESOURCES
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2020 annual report.
1. GENERAL
INTRO: QL A sustainable and scalable multinational agro-food producer, QL
has operations in four principal activities: Marine Products Manufacturing,
integrated Livestock farming, Palm oil Activities and FamilyMart. We produce
resource-efficient protein sources and food via operational footprints in
Malaysia, Indonesia, Vietnam and China.
2.
NOTABLE
POINTS:
a. QL is shown to be a highly potential growth
stock as its share value has increased 104 times since its initial listing in
year 2000.
b. Segment 1 - Marine Products Manufacturing: QL
specialises in the entire marine products chain from upstream to downstream
activities comprising deepsea fishing, aquaculture farming, surimi and fishmeal
production, and consumer foods. QL is Malaysia’s largest fishmeal manufacturer and
producer of surimi-based products. It is also the largest surimi producer in
Southeast Asia. Its consumer foods brands, Mushroom and Figo are distributed
across Asia, Europe and North America.
c. Segment 2 - Integrated Livestock Farming: With
businesses spanning the entire value chain from feed and raw material trade,
feed milling, layer farming to broiler integration, QL is a leading operator in
integrated livestock farming in Malaysia. Its farms in Malaysia and Indonesia
produce approximately 5.8 million eggs per day, 56 million Day Old Chicks (DOC)
annually and 22 million broilers per annum. Every year, QL supplies and
distributes over 1,000,000 metric tonnes of animal feed raw materials in
Malaysia.
d. Segment 3 - Palm Oil Activities: QL owns and
manages oil palm plantations and milling operations in Malaysia and Indonesia.
QL also pioneered the technology that converts palm waste biomass into high
quality, efficient burning fuel that minimises carbon emissions and improves
energy efficiencies through industrial boiler systems. QL’s total oil palm
estate holding is at 16,000 hectares in Sabah and Eastern Kalimantan,
Indonesia.
e. Segment 4 - Convenience Store Chain: The
FamilyMart convenience store chain is a natural strategic extension to QL’s
existing food production and distribution portfolio, that is direct to
consumer. FamilyMart’s central kitchen hold halal certification from Jabatan
Kemajuan Islam Malaysia (JAKIM). As the master franchisee in Malaysia, QL
operates all FamilyMart stores in the country, which to-date total 184. The
FamilyMart convenience store business had begun to turn a profit within two
years and the initial target of opening 300 stores by FY2022 is well underway.
f. In FY2020, QL posted a year-on-year 15% revenue
growth to RM4.15 billion while the profit after tax and minority interest
(PATAMI) rose 10% to RM239 million. The improvements are largely attributable
to the positive performance of the Marine Products Manufacturing (MPM), better
fish landing following the recovery of the post El-Nino low fish catch cycle,
and favourable foreign exchange drove pace at MPM.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 4155.8 million as
reported in 2020 annual report, this is a high revenue company. Between year
2012-2020, the counter’s revenue has been on an overall rising trend. On the other
hand, both of the Profit Before Tax (PBT) and Profit After Tax (PAT) are also on
a gradual rising trend.
b. SHARE PRICE: from Jan 2016 to Jan 2021, share
price range between RM4.00 to RM10.00. Bonus issue in Sep 2020 resulted in
correction to around RM6.00.
c. EARNING PER SHARE (EPS): earning per share in
last 5 years was overall rising, whereby it increased from 11.84 to 14.75 sen.
d. PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is 61.48, which shows that the share price is very expensive to invest in
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 418
million, which is around 10% of total assets. This shows that the management is
making a major investment in the future growth and expansion of the business.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2020 financial year, QL declared
a dividend payout of 4.5 sen to its shareholders, which amounts to a dividend
yield of 0.74%.
b.
DIVIDEND PAYOUT RATIO: The dividend-to-earnings
payout ratio is about 30%.
c. CONSISTENCY: This counter’s dividend payout has
been very consistent (dividend paid to shareholders in 5 years out of 5 years)
in the last five years, whereby dividends paid to shareholders ranged from 4.25
to 7.25 sen per share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2020 financial year, QL
reported a good return of shareholders’ equity, at 11.43%.
b. COST-TO-INCOME RATIO: In FY2020, the report
cost-to-income ratio is 1254%. This shows that the cost of doing business is relatively
high, which is normal in the agriculture industry.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 94%, whereby its debt level is less than its equity, resulting in a
healthy balance sheet.
d.
CASH FLOW: cash flow is positive, at around RM 261.4
million, equivalent to RM 0.16 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: This counter
is very well supported by institutional investors, there are 20 institutional
investors at top 30 major shareholders list, including EPF (7.25%), a few investment
funds, as well as insurance funds and retirement funds. Its major shareholders are
CBG (L) Pte. Ltd. (40.55%) and Farsathy Holdings Sdn. Bhd. (11.57%).
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