Premised on the rebound in egg prices, AMResearch reaffirmed its earnings projection:From our recent discussions with management, we learnt that egg prices have gradually rebounded from 28 sen/egg in 2QFY15 to 34 sen/egg over 3QFY15. Note that the latter was the average egg price in 4QFY14 and 1QFY15 and is the highest historically.Interestingly, we also understand that the price of its egg exports to Singapore (~30% of total production) is presently as high as 38 sen/egg. This is unusual given that the price differential between the domestic and Singapore market is typically between 1-2 sen/egg. The wider spread is mainly attributable to the current weakness of the RM vis-à-vis the SGD (YTD: -31%).
We make no changes to our FY15F-FY17F earnings estimates unchanged for now. The rebound in egg prices alongside the timely addition of two new farms in July and November (+25% capacity from 3.1mil eggs per day) bode well for TSC’s 2HFY15 earnings.
Chart 1: LTKM's weekly chart as at Sept 30, 2015 (Source: ShareInvestor.com)
Chart 2: Teoseng's weekly chart as at Sept 30, 2015 (Source: ShareInvestor.com)
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Teoseng and LTKM.