QL RESOURCES BHD
7084




total 180 stores at whole malaysia!!!
QL has set an initial target to open 300 stores of FamilyMart in FY2022.
Presently, the group has successfully opened 109 FamilyMart stores
and plan to double the number to 170 stores by the end of FY2020.
The expansion will be centred at Klang Valley, Melaka, Negeri Sembilan and Johor.

The Japanese convenience stores offer a variety range of
Ready-To-Eat (RTE) and microwavable meals, soft-served ice-cream and coffee
not only attracted the youngster but also the Muslim friends to come over
since the FamilyMart’s central kitchen operator known as
QL Kitchen Sdn Bhd
have received halal certification from the Department of Islamic Development Malaysia in May 2019.

(Source: The Malaysian Reserve, 11Nov2019)
Maintain hold call with an unchanged target price (TP) of RM8.20 per share:
Since the opening of QL Resources Bhd’s first FamilyMart outlet about three years ago, we understand the venture has already turned profitable.
We are very positive on this finding given that QL initially expected the venture to take seven years to reach profitability. We see similarities between QL and Charoen Pokphand Foods Pcl (Thailand) (CP) which brought the 7-Eleven franchise to Thailand in 1989 before listing the company under the name CP All PCL in 2003. In 2019, CP All’s sales of RM73 billion eclipsed CP’s total sales of RM71 billion.

We keep forecasts unchanged. Despite being a consumer staple, we expect uncertainty surrounding Covid-19 to keep QL’s share price subdued, particularly given the expensive valuations the stock trades at. The TP is based on unchanged 50 times financial year 2021 (FY21) earnings.

FamilyMart currently has 180 operational outlets. While this is significantly fewer than its competitors such as
7-Eleven, MyNews and KK Mart,

we estimate the profitability per outlet is significantly higher. We attribute this to higher average ticket amount, higher average customer count and skewed sales mix towards fresh food, which is a higher margin product.

QL intends to increase egg production capacities in Indonesia (to 1.4 million from 850,000) and Vietnam (to 1.8 million from 850,000) over the next four years. We expect egg consumption in Indonesia and Vietnam to continue to increase as both countries experience income growth (egg consumption in Indonesia increased from 60 eggs per person per annum in 2011 to 90 currently). Note that Malaysia’s current egg consumption tops 300 per person per annum.
We are positive on these growth ventures as we are confident there is still room for growth in consumption for Indonesia and Vietnam. As QL is already a large poultry player, we see little execution risk in these ventures. Note that QL already produces about 5.7 million eggs per day (4 million of these in Malaysia).

QL, the 30th largest listed company by market capitalisation, will become eligible to be included in the FBM KLCI should it enter the top 25 or existing members fall below the 35th position or lower.
We note that in late-FY17 when news broke that Nestle (Malaysia) Bhd was to be included in the KLCI, its forward price-earnings ratio rose from about 30 times to about 45 times. Should QL be included in the KLCI, we reckon it could see a rerating similar to Nestle. The KLCI is reviewed semi-annually, with the next scheduled for June. — Hong Leong Investment Bank Research, April 2