MENU

3 Things Investors Should Know About QL Resources Berhad

Credit: Alpha

Most companies in the agriculture industry that are listed in Singapore or Malaysia are in palm oil-related businesses.

But there is at least one agriculture company listed on Bursa Malaysia, the stock exchange of Malaysia, that has found success in other areas. Here are three things investors should know about this company with a sizeable market capitalisation of RM5.5 billion (S$1.8billion).

Three business segments

The company in question is QL Resources Berhad  (KLSE:7084.KL) and it operates in three main businesses. Yes, palm oil is one of them, but it is the smallest segment. QL Resources’ important businesses deal with marine livestock and poultry.

QL Resources is actually one of the largest marine products companies in the region. It has operations in deep-sea fishing, aquaculture farming, and surimi and fishmeal production. You may also find the company’s own brand of consumer food products in supermarkets –  according to QL Resources, its annual production of marine products reaches up to 140,000 metric tonnes.

As for the poultry business, QL Resources produces about 4.6 million eggs per day. It also produces 40 million Day Old Chicks and 20 million broilers annually in its farms in Malaysia and Indonesia.

On the palm oil side of things, QL Resources has 16,2000 hectares of palm oil plantations in Malaysia and Indonesia. However, as mentioned previously, this segment is small and only contributed about 5% to the company’s operating income in the fiscal year ended 31 March 2016 (FY2016).

Long history of growth

QL Resources has seen amazing growth over the past two decades. From FY1996 to FY2016, the company’s revenue has grown from just RM217 million to RM2.85 billion. This works out to a compound annual growth rate of 13.7%. Net income growth has been even more impressive – the company’s profit has compounded at 19.6% per year over the same period.

Shareholders of QL Resources have been duly rewarded over the long-term. According to S&P Global Market Intelligence, QL Resources’ total return since 2000 is 1,350% (including reinvested dividends).

Valuation

Companies with strong and consistent historical growth are generally well loved by the market and so do not come cheap. QL Resources is no exception. The company is currently trading at 28 times trailing earnings and offers a dividend yield of only 1%.

Foolish Summary

QL Resources is an agriculture company with three major businesses. The company has demonstrated an amazing long-term track record of growth, along with good results in recent years. However, QL Resources has a high valuation, which brings valuation risk to investors.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.