QL’s shrimp farm in Kudat, Sabah.
KUCHING (March 14): QL Resources Bhd’s (QL) Marine Product Manufacturing (MPM) plant in Tuaran Sabah has ample opportunity for growth thanks to the rise in fisheries and aquaculture industry in Sabah, analysts observed.
Following a recent visit to the company’s plant in Sabah, MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) said it remained optimistic about the company’s FY24 outlook.
“The rising fisheries and aquaculture industry in Sabah state present an opportunity for QL to expand its MPM segment,” it opined.
Based on the Department of Statistics Malaysia (DOSM), the fishing industry (inclusive of fisheries and aquaculture) contributed five per cent to the total state GDP in 2022, marking a significant increase from the pre-pandemic level of four per cent in 2018.
This is equivalent to 16 per cent of the total value of the agriculture sector.
“According to our recent conversation with the Ministry of Agriculture, Fisheries, and Food Industry (MAFFI Sabah), we gathered that Sabah boasts a self-sufficiency rate (SSL) of fish at 106 per cent, indicating the potential for export to Peninsular Malaysia and overseas markets.
“This highlights the sustainable fisheries resources within Sabah, either from marine capture or aquaculture, which benefit QL’s surimi and frozen seafood processing products,” it said, noting that QL stands as one of the largest integrated seafood processors in Sabah.
It pointed out that QL’s MPM in Tuaran, Sabah, is an integrated seafood processing facility involved in surimi, fishmeal, and frozen seafood processing.
Currently, QL employs a total of 700 workers, with 95 per cent being locals. Notably, the cutting process requires a significant number of workers, as the machinery is unable to cut the fish into different sizes efficiently. The plant boasts a total annual production capacity of 10,000 metric tonne for surimi, 20,000 metric tonne for frozen seafood, and 20,000 metric tonne for fishmeal.
It also highlighted that QL ventured into shrimp farming in 2013 with a total investment to date of RM56 million on 260 acres of land in Kudat.
“The farm comprises both shrimp ponds and a hatchery. Currently, the group has constructed 76 culture ponds in the area, with a total production capacity of 2,000 metric tonnes per annum and an employed workforce of 200,” it added.
“We gather that the group transports the harvested shrimp to the Tuaran MPM processing farm for further processing according to customer requirements.
“The shrimp are primarily sold in US dollars to restaurants and hotels, with prices varying based on market supply and demand, as well as shrimp quality,” MIDF Research said.
Beyond Sabah’s shores, the research team pointed out that QL Sabah MPM plant exported 80 per cent of its processed seafood products, including surimi, fishmeal, and frozen seafood.
China/Taiwan (30 per cent) is the primary market, followed by Japan (20 per cent), and Australia (10 per cent).
“This is primarily because exporting frozen seafood commands higher profit margins compared to selling in the local market.
“However, the export dynamics for shrimp vary across countries due to differing customer preferences.
“QL caters to China, Taiwan, and Singapore with both cooked and frozen shrimp, while only exporting prawn meat to Australia,” it said.
All in, MIDF Research said it remained positive about QL’s FY24 outlook, underpinned by its diversified revenue base, which operates across 4 divisions and geographical regions and thus offers protection against potential downside risks, and better performance for the MPM and ILF divisions ahead on the back of resilient demand for essential products.
“We like QL for venturing into a new market by supplying inflight hot food to MAS Awana through the CVS segment that signifies potential for a new market and future additional revenue.
“We gathered that sales for MAS Awana increased substantially in absolute amounts on a weekly basis, largely attributed to heightened demand spurred by increased tourist activity,” it added.
