QL Resources taps further business expansion in Indonesia, Vietnam

KUCHING: Leading marine and poultry egg producer, QL Resources Bhd (QL Resources) is targeting Indonesia to expand its surimi or fish meat products as well as to produce millions of chicken eggs in financial year 2013 (FY13).

According to OSK Research Sdn Bhd (OSK Research), QL Resources was forging ahead with its expansion into highly populated Asean countries like Indonesia and Vietnam.

“We expect earnings from the group’s marine, integrated poultry and palm oil operations in Indonesia to kick in strongly by FY14, taking QL Resources’s numbers to new heights,” the research house said.

In view of the of the bountiful supply of fish in Indonesia and the promising outlook for the global surimi industry, OSK Research said QL Resources had ventured into Surabaya, Indonesia with a 10,000-tonne capacity surimi plant, up from 5,000 tonnes previously, after it beefed up capacity in August 2012.

“The group is also building a new frozen surimi factory with annual capacity of 15,000- tonnes in Hutan Melintang, as well as a new cold room for surimi-based products in Johor Bahru (5,000 tonnes), and a frozen fish cold room in Endau (2,000 tonnes),” it said.

To diversify its business further, QL Resources had moved into egg production in 1994 and it produces 2.7 million eggs per day (epd).

The group is targeting to ramp up egg production at its integrated livestock farm in Cianjur, near Jakarta, Indonesia to 900,000 epd by March 2013 from 450,000 epd currently.

The research house also noted QL Resources planned to increase the number of day old chicks (doc) from 1.3 million to 2.5 million docs per month by March 2013.

“We believe that the group’s Indonesian operation will fuel its future earnings given the aggressive expansion in marine production, integrated poultry and palm oil divisions,” said OSK Research.

Additionally, QL Resources is also venturing in Vietnam, where it has started building a layer farm to produce 500,000 epd.

The research house gathered that backed by a solid business model, QL Resources exposure to three sustainable basic food industries in the marine, poultry and oil palm had enabled it to deliver remarkable results in the last 25 years.

“ QL Resources is a relatively safe bet amid economic uncertainties due to its earnings track record and defensiveness,” said OSK Research while rating the group as its top consumer sector pick.

As such, the research house viewed QL Resources stock price as outperformed with a fair value of RM4.05 per share, based on 19 times FY13 earnings per share.

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