KUALA LUMPUR (June 6): Shares in Leong Hup International Bhd (KL:LHI) rose in active trade on Thursday, and were set for their fourth consecutive day of rally, following news that the company's top executive had continued to accumulate the poultry firm’s stock.
Leong Hup rose as much as 4% to 59.5 sen, nearly recovering the losses since May 21. The stock was trading at 59 sen at 9.10am, valuing the company at RM2.15 billion on Bursa Malaysia. Trading volume totalled 4.67 million shares so far, above the 200-day moving average.
Some analysts, when contacted by The Edge, said they believe that there is further upside potential for Leong Hup, as current valuations had turned more attractive following recent share price underperformance.
All six analysts tracking the counter are currently recommending a "buy" call. The 12-month target price stood at 78 sen, Bloomberg data showed.
On Wednesday, Leong Hup reported to Bursa that its group chief executive officer Tan Sri Lau Tuang Nguang had acquired a total of 8.88 million shares in the poultry, egg and livestock feed producer over the past week for about RM5.02 million.
Lau bought two blocks of shares — two million shares and one million shares respectively — for 56 sen apiece last Friday.
The purchase continued on Tuesday. Lau bought 4.04 million shares for 57 sen apiece, followed by two blocks of shares — 965,000 shares and 875,000 shares respectively — for 57 sen apiece on Wednesday.
These transactions raised his direct stake in Leong Hup to 0.24%. He also holds a 1.74% indirect stake in the group.
Lau is the brother of Tan Sri Lau Eng Guang and Lau Chia Nguang, and the uncle of Datuk Lau Joo Hong, Lau Joo Han and Lau Joo Keat, who are directors and major shareholders of the company.
The poultry company had earlier faced heavy sell-off on investors' expectations that it will register lower earnings for the financial year ending Dec 31, 2024 (FY2024), due to the absence of subsidies and a lack of demand growth catalysts.
Nevertheless, for the first quarter ended March 31, 2024 (1QFY2024), Leong Hup managed to record a more-than-doubled net profit of RM56.58 million, compared with RM22.14 million a year earlier, thanks to a turnaround of its Indonesian operations on better margins for chicks and chickens.
Quarterly revenue increased nearly 10% to RM2.41 billion, from RM2.2 billion a year ago.
The company's core net profit of RM60.3 million came at 22.6% of the consensus full-year estimation, and 27.4% of Hong Leong Investment Bank (HLIB) Research's full-year forecast.
HLIB expects Leong Hup's decent set of performance in 1QFY2024 to be sustained in the near term, supported by stabilised day-old-chick prices in Indonesia, arising from tighter supply of grandparent stocks, stable feed prices, and continued volume growth in the Philippines.