KUALA LUMPUR: QL Resources Bhd's revenue is projected to increase at a compounded annual growth rate (CAGR) of 9.5 per cent from financial years 2022 (FY22) to FY25, said Affin Hwang Capital.

This will be driven by a recovery in export sales from the marine segment from the reopening of trading borders post Covid-19 lockdowns.

Affin Hwang said the stronger demand from Indonesia and the Vietnam livestock businesses as well as higher new store sales contribution as FamilyMart continued store-expansion plans would also help in QL Resources' growth.

"On the other hand, this is to be partially offset by lower sales from the palm oil business as demand declines and as the crude palm oil (CPO) price normalises," it said. 

Despite projecting a strong core net profit recovery in FY23, Affin Hwang  expects QL Resources' core net profit to grow marginally in FY24.

This is on the back of a rising cost environment within the Malaysia livestock operation as profitability is limited by a ceiling price set by the government as well as a potential translation loss from the Indonesia palm oil operations due to a weakening of the Indonesian rupiah to the US dollar. 

"This may be mitigated by a better margin mix from the marine segment and increasing contribution from the FamilyMart stores from opening of new stores and new FM Mini contributions," it said. 

Affin Hwang maintained its "Hold" rating and target price of RM6.00 on QL Resources. 

"Recently QL Resources has been included in the FBM KLCI 30-stock benchmark index.

"We believe this will provide some support to the share-price level in the coming challenging macro environment due to the heightened risk of a recession," it added.