KUALA LUMPUR (Jan 30): Malacca Securities has assigned a fair value of 66 sen to Main Market-bound Hock Soon Capital Bhd, a 10% premium to its initial public offering (IPO) price, citing a multi-year capacity expansion and favourable macro tailwinds amid the removal of government egg subsidies.
The integrated poultry producer specialising in table egg production is set to make its debut on Feb 13.
“The group, which is offering its shares at an IPO price of 60 sen, has been assigned a fair value of 66 sen, implying a 10% upside. The valuation is based on a price-to-earnings multiple of 9.5 times, pegged to mid-year 2027 forecast earnings,” said the research house in a note on Friday.
For FY2025, the group reported a net profit of RM42 million, supported by strong margins despite a decline in average selling prices for table eggs amid heightened competition. Ordinary eggs accounted for about 97% of revenue, with premium eggs contributing about 3%.
While earnings are expected to dip in FY2026 due to the substantial reduction in government egg subsidies, Malacca Securities projects a core net profit of RM33.2 million for the year, before recovering to RM35.8 million in FY2027 and RM38.5 million in FY2028, underpinned by gradual capacity expansion and improving operating leverage.
The research house also highlighted potential margin support from a stronger ringgit, noting that raw materials for feed production, largely denominated in US dollars, accounted for about 70% of total purchases in FY2025. Lower feed costs, combined with the group’s vertically integrated model, are expected to help cushion the impact of subsidy removal.
Capacity expansion as the core growth driver
The core growth driver is the group’s planned expansion at its Teluk Intan site, which is set to increase its daily egg production capacity over a 60-month rollout. The project involves the construction of 25 new closed-house poultry coops, adding about 1.53 million eggs per day once fully completed. The expansion will be supported by an upgrade to its in-house feed mill in Bidor, including the addition of a new production line by the fourth quarter of 2027.
Beyond the domestic market, Hock Soon is preparing to expand into Singapore, with plans to obtain the Singapore Food Agency export licence by the first quarter of 2026. The move is expected to provide revenue diversification and exposure to higher-value export demand while reducing reliance on the local market.
Founded in 1979, Hock Soon operates a vertically integrated business model spanning poultry farming, egg production, feed milling, and the grading and distribution of ordinary and premium eggs under its house brand ‘QPlus’, as well as third-party labels. The group currently operates 35 automated closed-house chicken coops with a total capacity of about 2.4 million birds, producing 1.63 million eggs daily.