Leong Hup slips into the red in 3Q

by S BIRRUNTHA / pic by TMR FILE

LEONG Hup International Bhd posted a net loss of RM53.42 million in the third quarter ended Sept 30, 2021 (3Q21), against a net profit of RM22.53 million in 3Q20.

In a filing to Bursa Malaysia yesterday, the integrated poultry, egg and livestock feed producer stated that pretax profit from livestock and other poultry related products decreased by 350.6% primarily due to depressed average selling price (ASP) of broiler chickens in Vietnam and margin compression stemming from the general increase in input cost of feed which could not be passed on due to weaker demand as a result of Covid-19 pandemic.

The group recorded a revenue of RM1.81 billion for the quarter, a 14.98% increase from RM1.57 billion a year ago, underpinned by higher revenue from Indonesia and Malaysia.

“The increase in revenue from Indonesia was primarily due to higher sales volume of broiler chickens and favourable ASP of day-old-chicks and broiler chickens.

“Higher revenue from Malaysia was mainly due to an increase in ASP of eggs and the expansion of its downstream business-to-consumer channel from June 2020,” it said.

The group posted a loss per share of 1.46 sen for the period compared to an earnings per share of 0.62 sen in 3Q20.

For the cumulative nine months ended Sept 30, Leong Hup’s net profit fell 21.7% to RM47.42 million from RM60.59 million a year ago, while revenue climbed 20.4% to RM5.34 billion to RM4.43 billion.

Leong Hup ED and group CEO Tan Sri Francis Lau said South-East Asian nations saw strong progress in the pace of Covid-19 vaccinations recently, which is expected to bode well for the recovery in economic activities, going forward.

He said the pace of recovery is expected to be rather uneven across the group’s operating markets, with certain countries including Malaysia and Singapore gearing up to enter into the endemic phase of Covid-19 as practically all sectors have been allowed to reopen, albeit at a limited capacity.

He added that countries like Vietnam, Indonesia and the Philippines have begun to gradually relax lockdown measures as these countries ratchet up vaccination rates.

“Although improving, business conditions remain tough and demand is still hovering below pre-Covid-19 levels.

“Nevertheless, we are optimistic the group will continue to navigate the new market reality with our fundamentals firmly intact.

“Our priority is the health and safety of our people and we remain steadfast in supporting domestic food security and the economic recovery of our operating markets, while staying focused on the execution of our ‘Farm-to-Plate’ strategy,” he said in a separate statement.

Lau noted that as the group deploys business recovery measures, cost leadership remains an important and ongoing agenda.

He added that the group’s downstream play continues to be a key strategic focus, as it seeks to diversify Leong Hup’s revenue base, re-invest into profitable growth and deepen integration within the poultry value chain.

“We look forward to the group emerging from the Covid-19 pandemic stronger and more nimble,” he said.

The group stated that it has adequate liquidity for operations and is well-positioned to capture opportunities as the market recovers.

Shares of Leong Hup closed 1.5 sen or 2.63% lower at 56 sen yesterday, valuing the group at RM2.03 billion.