QL Resources forecast to face operating challenges for FY26

PETALING JAYA: Integrated agro-based business group QL Resources Bhd’s outlook for its financial year ending March 31, 2026 (FY26) is likely to remain subdued, with operating challenges within its integrated livestock farming and convenience store segments hindering meaningful earnings growth, analysts say.

In a report, Maybank Investment Bank Research (Maybank IB) said the group’s second quarter earnings for FY26 should reflect lower profit before tax margins from its livestock segment quarter-on-quarter, given the removal of egg subsidies on Aug 1.

Maybank IB noted that egg subsidies of 10 sen per egg were halved on May 1, to five sen, and subsequently removed on Aug 1. “Since then, we understand that the group has only managed to raise egg average prices by five sen per egg.

“However, industry egg supply has remained tight, hence it has not experienced any egg volume decline post-adjustment.”

Further, the appreciation in the ringgit versus the US dollar and relatively stable feed raw material prices for corn and soybean should offer some cost relief for the livestock segment,” the research house said.

It also said it expected QL’s marine products manufacturing segment to continue to be the main driver of group earnings growth in FY26.

Despite potential cost pressures driven by weak fish landings and soft fishmeal demand, the prices and demand for surimi and frozen surimi-based product should remain stable, the research house said.

Elsewhere, the group’s surimi processing plant in Indonesia operated by PT Hasil Laut is running at a utilisation rate of about 20% and marketing efforts are being ramped up to grow sales volume at a faster pace, it added.

The research house said earnings from the convenience store segment may remain challenging as weak sales per store are being exacerbated by rising store operating costs due to the higher national minimum wage, the sales and service tax on leases, and utility cost increases.

As for the group’s palm oil and clean-energy sector, segmental earnings growth is expected to be driven by its exposure to clean energy through BM Greentech Bhd via progressive increases in solar and other renewable-energy project.

Given its intention to exit its plantation business, QL is also looking to dispose one remaining palm oil mill and palm oil estate in Sabah, it said.

Maybank IB Research said the group’s upside factors include higher-than-expected capacity increases in surimi processing, and/or egg production, stronger growth in domestic consumer disposable income

Growth in export volumes within the marine-products segment is also an upside.