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$TEOSENG / 7252 (TEO SENG CAPITAL BERHAD)

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*🥚 Teo Seng Capital 4QFY24 Result Updates 🥚*

♦️ *4Q Performance (YoY & QoQ)*
Revenue: RM188.4m (-5.7% YoY, -1.0% QoQ) 📉
PAT: RM64.9m (-3.0% YoY, +11.8% QoQ) 🚀 ASP declined QoQ
PAT Margin: 34.4% (vs 30.5% in 3QFY24) 📈 higher sales volume & stable feed cost supported earnings
♦️ *Full Year FY24 vs FY23*
Revenue: RM753.8m (-0.9% YoY)
PAT: RM183.4m (+17.7% YoY) 💰
Exceeded our FY24 forecasted profit of RM175m by 5%
Strong balance sheet: First time becoming a net cash company since listing
♦️ *Growth Catalysts in 2025*
Downstream egg products performing well, targeted for profit improvement (but contribution to group revenue still insignificant)
Slaughtering Plant to commence operations in Jul'2025 - savings of PBT MYR4m per year
More new downstream egg-related products launching
Targeting 4.8m eggs daily production in 2025 (+7% YoY)
♦️ *Egg Industry Dynamics*
Egg industry operates in either free float market OR government intervention (price ceiling control (-) & subsidy (+))
Latest update (mid-June 2024):
🔹 Price ceiling lowered by 3 sen
🔹 Subsidy remains at 10 sen per egg
🔹 No further updates on policy changes yet
With major festivals in 1H25, management expects no policy changes until June 2025
No default payment from the government for eggs sold in the past
Yet to receive subsidies from Jan 2025 onwards, but monthly subsidy collection would range RM9-10m
♦️ *Structural Industry & Company Changes*
Industry Consolidation:
🔹 Top 5 egg producers' market share grew from 39% (2017) to >60% now → Less price competition if market is free float
Teo Seng Transformation:
🔹 Indirect sales down from 72% (2020) to <37% (2024) with new distribution centres
🔹 Saves 3 sen margin per egg for the Group - bypassing distributors
♦️ *Valuation & Market View*
With strong FY24 earnings & continued subsidy, Teo Seng is likely to maintain PAT >RM183m in FY25
TTM & FY25F P/E: only 3.5x – highly undervalued given strong earnings visibility
A steal for fundamental investors with positive structural shifts in both industry & company
♦️ *Technical View*
Stock approaching SMA200, a key support level 📊
Bullish case: If it rebounds with higher volume & breaks key resistance (MYR1.23 & MYR1.33) → Long-term uptrend remains intact ✅
Bearish case: If it breaks below RM1 with high volume, could signal a temporary downtrend/consolidation ❌
💡 Teo Seng remains fundamentally strong with a bright outlook, but investors should monitor technical signals closely! 🚀