QL Resources’ marine segment to be future growth driver

KUCHING: QL Resources Bhd (QL Resources) is counting on its marine segment for future growth, as the group continues to eye opportunities to acquire local and regional surimi-based manufacturers to scale up its business.

OSK Research Sdn Bhd (OSK Research) in its research report noted that the company had the capacity to produce 30,000 tonnes of surimi, 25,000 tonnes from Malaysia and 5,000 tonnes from its Indonesian unit in Surabaya.

“The group’s recent expansion at the Surabaya marine products plant will boost its annual capacity in Indonesia from 5,000 to 10,000 tonnes,” said OSK Research that also noted that the company had been eyeing further acquisition opportunities to scale up the lucrative business with particular focus on surimi and surimi-based manufacturers.

QL Resources also recently invested in prawn aquaculture in Kudat, Sabah. This venture was expected to take off by March 2014. With these initiatives taken by the company and the stable demand for marine products, the research house expected the marine segment to deliver better earnings for the group on a year-on-year (y-o-y) basis.

Among the other efforts the company had taken to expand its business in Malaysia, the company had been building a new frozen surimi-based factory with an annual capacity of 15,000 tonnes in Perak, expected to be completed by the middle of this year.

“Also in the pipeline is a new frozen fish cold room with an annual capacity of 2,000 tonnes in Johor slated to be opened by the first quarter of financial year 2014,” OSK Research highlighted.

Its main revenue contributor, the integrated livestock farming division had been impacted by falling egg prices in Peninsular Malaysia while the prices of corn and soybean had risen due to the recent drought in the US.

Following the increase in raw material cost and lower selling prices, OSK Research observed thinning margins for this segment.

“However, QL Resources is aiming to ramp up its egg production at the integrated livestock farm in Indonesia from 450,000 eggs per day currently to 900,000 by March 2013,” the report added, noting that the company also planned to increase the number of day-old chicks from 1.3 million per month to 2.5 million per month.

QL Resources’ integrated livestock farming division was expected to pick up pace in the near future following stabilising raw feed material prices in the Peninsular Malaysia and Indonesia.

On palm oil activities, the company has at this juncture 1,200 hectares of mature plantations in Sabah and 20,000 hectares under development in East Kalimantan, Indonesia.

“This segment’s growth catalyst will mainly be its maturing Indonesian plantations and a potential joint venture with other crude palm oil millers on a palm pelletisation project going forward.”

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