KUALA LUMPUR: QL Resources Bhd is expected to sustain growth in the financial year ending March 31, 2023 (FY23) with the normalisation of the economy, Kenanga Research said.

The firm said this was given the unlikelihood of marine products manufacturing (MPM) activities to be affected by pandemic, as in the first half (1H) of FY22, benefitting further its integrated livestock farming (IFL) and convenience store (CVS) segments. 

"Notwithstanding the persistently elevated input prices and volatile supply issue, we expect margins to normalise ahead (at FY22 levels) but unlikely to reach its pre-pandemic level," it said in a note today.

Kenanga Research said QL's FY22 earnings came in line with top-line posting stellar improvement coming from all segments with the exception of the MPM segment. 

On a positive note, margins saw stability from the previous quarter offsetting the poor profit before tax margins in 1H FY22 due to the pandemic. 

"As the economy reopens and barring further pandemic woes, we expect sustained growth ahead with margins normalising," it said.

Post results, Kenanga Research made no changes to QL's FY23 earnings as margins assumptions were in line with FY22 margins and introduce.

The firm also introduced QL's FY24 earnings where it expects sustained growth but remained conservative on margins. 

Kenanga Research has reiterated its "Market Perform" call on QL, with a higher target price of RM5.45 from the previous RM5.05.

"This was in line with its five-year mean which we feel is justified given its historical resiliency and robust earnings coupled with exciting growth potential from diversified revenue streams. 

"However, volatile commodities prices and supply chains are still concerns," it said.