This article first appeared in The Edge Malaysia Weekly on January 12, 2026 - January 18, 2026

POULTRY and egg producers appear earnings-resilient, notwithstanding the removal of a government-sponsored egg subsidy scheme last year, with diversified and integrated players proving more adept and prompting some analysts to revisit the sector.

After more than three years of subsidies, which commenced in February 2022 at a cost of RM2.5 billion, the egg subsidy was halved from 10 sen to five sen per egg on May 1 last year before it was fully removed on Aug 1. Price controls and subsidies for chicken were removed earlier, in November 2023.

Analysts say the ringgit’s strengthening against the US dollar will help ease import costs for food and beverage (F&B) and poultry companies reliant on US dollar-denominated commodities, supporting margin recovery in sectors sensitive to raw material prices. Coupled with upcoming festive demand over Chinese New Year and Hari Raya Aidilfitri in the first quarter of the year, poultry and egg producers may warrant a fresh look, they add.

Earnings remain mixed following the removal of egg subsidies, but many poultry and egg producers are now trading at single-digit price-earnings multiples, prompting several research houses to initiate or reiterate “buy” calls, particularly on larger, integrated players.

RHB Research and Maybank Investment Bank Research, for instance, have both recommended Leong Hup International Bhd (KL:LHI), citing strong contributions from its Indonesia operations and favourable feed raw material prices.

“We believe the fundamental improvement in the poultry industry driven by cost tailwinds and market consolidation has yet to be priced in,” RHB Research says in a Nov 25 report.

But the research house cautioned that earnings could soften in the near term as the full impact of the egg subsidy termination filters through. However, Leong Hup’s Indonesia business is expected to help cushion the impact, supported by elevated average selling prices (ASPs).

“Beyond the immediate term, we believe the overall fundamentals of the poultry industry have improved, with the pandemic and commodity supercycle phasing out smaller and weaker players,” it says. “This has led to industry consolidation, which is favourable for large players like Leong Hup.”

The group has also strengthened its balance sheet, with net gearing falling to 0.39 times in the quarter ended Sept 30, 2025 (3QFY2025), from 1.1 times in FY2022.

Maybank IB, meanwhile, raised its earnings forecast for Leong Hup, citing resilient poultry demand and ASPs in both Malaysia and Indonesia.

“With manageable levels of feed raw material costs expected in the near term, particularly for corn and soybean, risks to group margin volatility are also minimised,” it says.

The poultry industry remains one of the country’s most important food sectors. According to the Malaysian Journal of Veterinary Research 2024, chicken is the most consumed protein source accounting for 65.9%, followed by fish (14.8%), eggs (13.6%) and other sources.

Less diversified players, mainly in egg production, will require more time to normalise their operations post-subsidy removal.

Pure egg player Teo Seng Capital Bhd’s (KL:TEOSENG) net profit for 3QFY2025 ended Sept 30, 2025, plunged by more than half to RM25.35 million from RM58.05 million a year earlier, despite higher revenue.

For the first nine months of FY2025, net profit slipped 8.35% to RM108.57 million from RM118.46 million a year earlier, mainly due to lower ASPs for eggs. Nevertheless, the impact was partially mitigated by stronger demand for its animal health products.

Its share price has been largely flat over the past year, closing at RM1.01 last Thursday. At RM1.01 per share, the counter is trading at a historical price-earnings ratio of 3.45 times and a forward PER of 4.39 times.

PublicInvest Research expects Teo Seng’s earnings to decline by an average of 22% over FY2025-FY2026 to reflect the subsidy removal, before recovering by 8% in FY2027.

“This is mainly underpinned by rising egg demand and the group’s ongoing initiatives to diversify into higher-margin products such as liquid eggs and hard-boiled eggs,” the research house says in a Nov 19 report. “In addition, Teo Seng is looking to reduce its reliance on third-party distributors by increasing its proportion of direct sales, which should provide estimated cost savings of two to three sen per egg.”

It is unclear how much in government subsidies Teo Seng received in FY2024, but in FY2023, the group received RM104.76 million.

The other pure egg players TPC Plus Bhd (KL:TPC) and LTKM Bhd (KL:LTKM) received RM49 million and RM25 million respectively, in subsidy payments in 2024. Egg and broiler producer QL Resources Bhd (KL:QL) received RM133 million while PWF Corp Bhd (KL:PWF) and CAB Cakaran Corp Bhd ­(KL:CAB) collected subsidy payments totalling RM66 million and RM56 million respectively.

Better financial results have been lodged by more diversified producers such as CAB Cakaran, which is primarily involved in the upstream, midstream and downstream segments of poultry production, as well as the operation of supermarkets and F&B retail outlets under the Kyros Kebab brand.

For 4QFY2025 ended Sept 30, 2025, the group’s net profit doubled to RM20 million from RM9.75 million a year earlier due to fair value gain, lower feed costs and a stronger performance by the integrated poultry division.

For the full-year FY2025, group net profit jumped 20.1% to RM90.65 million from RM75.47 million a year earlier.

Shares in the company gained 10% over the last one year to 59 sen last Thursday, but TA Securities Research expects more upside and has a “buy” call on CAB Cakaran with a target price of 89 sen per share, based on the group’s recent acquisition of Cargill Feed Sdn Bhd (CFSB), which will bring feedmill production in-house to enhance cost efficiency.

Raw materials constitute the largest component of the group’s cost structure, accounting for about 70% of CAB Cakaran’s cost of sales.

“Following planned upgrades, CFSB’s revenue is projected to reach RM600 million and contribute RM21 million in net profit by 2027, further reinforcing CAB Cakaran’s vertical integration and supporting its long-term growth trajectory,” the research house says in a Dec 9 report.

In addition, the group had finally moved ahead with its long-awaited poultry joint venture in Indonesia, after a decade of delay. CAB Cakaran is partnering with privately held Salim Group — best known for Indofood Sukses Makmur and the world’s largest instant noodle producer under the Indomie brand. Salim Group, which also holds a 15.2% stake in CAB Cakaran, does not have poultry operations.

The first phase of the five-year plan will see a US$10 million (RM40 million) investment to establish a food processing facility, with operations targeted to begin by the second quarter of 2026. The facility will be leased, with land and building costs excluded from the initial outlay.

Meanwhile, the best earnings performer in the poultry sector is Malayan Flour Mills Bhd (KL:MFLOUR), which posted a near fivefold jump in third-quarter net profit to RM35.79 million from RM7.34 million a year earlier, driven by lower wheat prices and stronger contributions from its Indonesian flour milling and poultry joint ventures.

During the quarter under review, its poultry arm, Dindings Tyson Sdn Bhd, returned to the black with a net profit of RM2 million compared to a net loss of RM2.7 million a year ago, as increased sales and lower input costs offset weaker selling prices.

For the nine months ended Sept 30, net profit rose 51.3% to RM96.95 million from RM64.07 million, while revenue grew 3% to RM2.37 billion from RM2.3 billion. 

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