KUALA LUMPUR (Nov 24): Leong Hup International Bhd's net profit came in higher at RM22.52 million in the third quarter ended Sept 30, 2020 (3QFY20), up 38.5% quarter-on-quarter (q-o-q) against RM16.27 million on the back of improved revenue in Vietnam and smaller losses from operations in Indonesia.

Earnings per share, accordingly, slipped to 0.62 sen from 0.45 sen.

Revenue grew 10.4% to RM1.57 billion in 3QFY20 compared with RM1.43 billion in 2QFY20 on higher sales volume of livestock feed in Indonesia and Vietnam, said Leong Hup in a filing with Bursa Malaysia today.

On a year-on-year (y-o-y) basis, the integrated poultry producer's net profit, however, fell by 49.2% y-o-y from RM44.38 million or 1.22 sen per share in 3QFY19, despite the 3% y-o-y increase in revenue, from RM1.53 billion.

Leong Hup attributed the decline in earnings to the lower revenue contribution from its livestock and other poultry-related products as a result of unfavourable average selling prices and sales volumes of day-old chicks and eggs in Malaysia as well as lower broiler prices in Philippines.

The poultry group also noted the poorer earnings from the feedmill segment due to normalisation of margins in Indonesia.

For the cumulative nine-month period, its net profit was only about half (49.9% lower) at RM60.59 million, from last year's RM121.05 million, while revenue declined 1.7% to RM4.43 billion, from RM4.51 billion.

On prospects, the board expects a satisfactory financial performance for the current year, barring unforeseen circumstances.

"With the gradual economic recovery taking place in the second half of 2020 and the group's strategy to move further downstream into the business-to-consumer channel to improve margin stability," said Leong Hup, adding that the group has adequate liquidity for operations and is well positioned to capture opportunities when the market recovers.

In a separate statement today, its group chief executive officer Tan Sri Francis Lau Tuang Nguang said the company has a sound business model, as demonstrated by its ability to see more efficient use of growing productive capacities to increase domestic market volumes, despite a contraction in aggregate demand and against a backdrop of volatile average selling prices.

"As we continue to harness efficiency gains on the back of our cost optimisation agenda, we believe we are in a sweet spot to benefit from the ongoing market consolidation, which has been accelerated by the effects of Covid-19," Lau added.

Leong Hup's share price dropped 1.5 sen at 68 sen today, valuing it at RM2.48 billion. Year-to-date, the counter is down 22.7% from 88 sen.

Notably, Leong Hup, which made its comeback to the Main Market of Bursa Malaysia in May last year, has seen its share price fall 38.2% from its initial public offering price of RM1.10.