Leong Hup makes firm debut

KUALA LUMPUR: The biggest initial public offering (IPO) on Bursa Malaysia in almost two years saw Leong Hup International Bhd’s (LHI) shares ending the day unchanged at RM1.10.

The company made a firm debut initially yesterday as it opened at RM1.12, a two-sen premium over its offer price of RM1.10 in a cautious market amid the ongoing US-China trade war.

It rose to its day high of RM1.19 minutes after the stock opened for trading yesterday.

LHI was the most actively traded stock yesterday with 215.399 million shares changing hands.

At a press conference after its listing yesterday, the company’s executive director/group CEO Tan Sri Francis Lau Tuang Nguang said the company was aiming for sustainable and constant growth.

In its first quarter ended March 31, Leong Hup’s net profit rose 15% to RM60.58mil compared with RM52.68mil a year ago, on a higher sales volume and an increase in the selling price of eggs in Malaysia and broiler chicks in Indonesia.

Revenue rose around 11.2% to RM1.51bil from RM1.35bil previously, while pre-tax profit grew by about 48% to RM114.91mil from the same quarter a year ago.

“I repeat, we saw a profit growth of 48.2%. The (shareholders) were all very happy about the first quarter’s (results),” Lau said.

“Of course, we cannot sustain this strong growth for the coming three quarters, but we will (aim for) constant growth. The latest research also shows that eggs are among the best forms of protein,” Lau added at the press conference.

The company’s chief financial officer Chew Eng Loke said the company was committed to maintaining its 30% dividend policy.

Commenting on its profit margins, LHI said it recorded a net profit margin of 6% at present and that it would focus on business efficiency to sustain these margins.

“We focus on looking at quality products to sell and optimising costs. Profit margins are actually a reflection of product prices as well, which go up and down. As long as we are the most efficient in the industry, we would be able to make a good profit over the longer term,” Chew said.

“Our advantage is that we operate in multiple countries. Some countries do very well in certain years, while some others do better in other years. This is our strength,” Chew added.

On whether the growth can be sustained, moving forward, Chew said that the company is expected to continue to grow, riding on the population growth trends in Asean.

“We also see the trend of per capita income increasing in this region. With this, the market size will keep increasing. Therefore, since we are already one of the largest today, we expect to tap into this growth,” Chew said.

He added that LHI was also well-positioned in terms of its balance sheet at 0.9 times gearing to take advantage of any inorganic growth opportunities that may arise through mergers and acquisitions.

Other potential new business areas LHI would like to look into is the business of food processing in Indonesia and Malaysia.

“This would be our vision in the longer term. We have something in mind,” Lau said.

Source: TheStar