QL Resources 'working on a number of deals'

SHAH ALAM: Agro-food corporation QL Resources Bhd, which has set aside RM300 million as capital expenditure for the current financial year ending March 31, 2015, will continue to seek opportunities for mergers and acquisitions (M&As) that complement its current businesses, said its group managing director Dr Chia Song Kun.
"We are continuously looking for M&A opportunities that complement our three core businesses – marine products manufacturing, integrated livestock farming and palm oil. We are eyeing M&A opportunities within the geographical areas where we currently have presence," he told reporters after the company's AGM here on Friday.
"We are currently in talks. When the time is right, we will make an announcement. There are quite a number (of deals) that we are working on. There are lots of things that need to be ironed out," he said.
He said the money will be used to continue financing its business plans, including expansion across neighbouring countries, strengthening its value chain and downstream and branding activities as well as acquisitions.
Chia said QL Resources targeting double-digit growth in revenue and profit, driven by growth in its three core sectors.
Besides organic growth, he said, its new business – shrimp aquaculture – is also expected to contribute to top and bottom-line results.
"This is coupled with the recovery in surimi and livestock prices. Overall, from the second quarter onwards, farm produce prices look optimistic. However, the palm oil division is less promising with crude palm oil prices dropping below RM2,000 a tonne," Chia said.
For the financial year ended March 31, 2014, QL Resources recorded a net profit of RM160 million, up 21% compared with RM131.7 million a year earlier while revenue was up 14% to RM2.457 billion from RM2.146 billion previously.
Public Investment Bank believes that QL Resources' ongoing growth strategies coupled with reputable branding will continue to lift its performance.
The bank said QL Resources' management continues to be optimistic that the second quarter of FY15 will be driven by the recovery in regional farm produce prices, better fishmeal prices and the festivity effect, among others.
It said the company's performance will be supported by on-going marine-products manufacturing capacity expansion and extending to aquaculture projects which would see higher contributions from the second quarter of FY15 onwards, expansion of existing poultry farms in Malaysia, Indonesia and Vietnam, and building feedmill capacity in Indonesia.
BIMB Securities Research maintained the FY15 earnings forecast for QL Resources but raised the FY16 forecast by 5%, adjusting for the margins in the integrated livestock farming segment by expecting a recovery in farm prices.
On its Budget 2015 wish list, Chia said the company is looking forward to another set of incentives to promote exports.
He said the company is enjoying a 10-year tax waiver for prawn farming and poultry farming, and it is getting reinvestment allowances.