Poultry stocks rise as Singapore dollar strengthens

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KUALA LUMPUR (Nov 3): Shares in poultry farmers Huat Lai Resources Bhd and Teo Seng Capital Bhd gained in early trade today as they are seen as a beneficiary of the Singapore dollar's appreciation against the ringgit.

Huat Lai shares gained as much as 15.3% in the morning trade, while Teo Seng's rose as much as 4.2%.

As at 1.16pm the Singapore dollar was trading at 3.0673 versus the ringgit. The Singapore dollar has appreciated by 19% against the ringgit from levels of 2.5779 a year ago.

In its report dated Oct 7, Inter-Pacific Research said Huat Lai is deemed the largest Malaysian exporter of eggs to Singapore, while Teo Seng, which exports 30% of its eggs to Singapore, is the second largest.

The research firm said the race for prime market share in the poultry farming industry in Malaysia is between Huat Lai and Teo Seng, with the former having a production capacity of 3.6 million eggs per day, and the latter 2.7 million eggs per day as at December 2014.

“Our reading is Huat Lai and Teo Seng are racing for market share, while QL Resources Bhd and Lay Hong Bhd are expanding at a slower pace. LTKM Bhd is seeking to diversify away from the poultry industry, with its previous forays into sand mining and glass manufacturing.

“In a typical industry consolidation, the number of players grow less and industry players are able to control supply more efficiently, hence avoiding regular cycles of market short/over-supply previously observed in the industry,” said Inter-Pacific Research.

At the close of noon market today, Huat Lai shares were traded up 41 sen, or 10.8%, to RM4.21 and was the third largest gainer on Bursa Malaysia this morning, with 99,500 shares changing hands and a market capitalisation of RM328.1 million.

Teo Seng shares closed the morning session up 3 sen, or 1.8%, to RM1.71, with 3.44 million shares traded and a market capitalisation of RM 515.5 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)