KUALA LUMPUR (Nov 26): Poultry firm Leong Hup International Bhd’s net profit rose 26% to RM44.38 million or 1.22 sen per share in the third quarter ended Sept 30, 2019 (3QFY19), from RM35.21 million or 1.04 sen last year, thanks to higher earnings from its feedmill business.

The feedmill segment saw its earnings before interest, tax, depreciation and amortisation (ebitda) doubled to RM133.48 million, from RM66.66 million.

The segment’s improved earnings are due to higher sales recorded in Indonesia, as well as higher contribution from Vietnam, following the commencement of operations of the Dong Nai feedmill plant in January 2019.

Quarterly revenue grew 7.35% to RM1.53 billion, from RM1.42 billion a year ago (3QFY18).

For the cumulative nine-month period (9MFY19), Leong Hup saw its net profit decline 21.2% to RM121.05 million or 3.43 sen per share, from RM153.55 million or 4.52 sen per share last year, although its revenue grew by 7.6% to RM4.51 billion, from RM4.19 billion.

The decline in cumulative earnings was weighed by the lower contribution from its livestock and poultry-related products, on lower margin arising from depressed prices of day-old-chicken (DOC) in Indonesia, as well as the depressed broiler chicken prices in Indonesia and Vietnam.

In a separate statement today, its group chief executive officer Tan Sri Lau Tuang Nguang said while Indonesia and Vietnam are expected to continue to see growth and contribution towards the group’s bottom line, the group has also taken steps to strengthen its geographical diversification.

Commenting on its wholly-owned Myanmar subsidiary Leong Hup Myanmar Co Ltd, which was incorporated a month ago (Oct 16), Lau said: “The registration of our new subsidiary in Myanmar marks our first step to tap into the growing economy and meat consumption in Myanmar. We intend to penetrate the market through the livestock segment.”

He, however, said the group’s venture into Myanmar is at a preliminary stage and thus, is not expected to make any material contribution to the group’s earnings for FY19 and FY20.

Looking ahead, Leong Hup said higher sales volume of both livestock and feed is expected to mitigate the seasonally weaker livestock prices in the fourth quarter (4QFY19), adding that the group is expected to see a satisfactory financial performance for the remaining period of the year, barring unforeseen circumstances.

Leong Hup’s shares fell 3.5 sen or 3.74% to close at 90 sen today, valuing the company at RM3.29 billion. Some 10.4 million shares were traded.