KUALA LUMPUR: TA Securities Research remains optimistic that Leong Hup International Bhd will deliver strong results following the lifting of Covid-related movement restrictions.

       The research house said the group's earnings growth will come on the back of volume expansion, value chain integration and vigilant cost control.

       "In addition to rolling out new The Baker Cottage stores in FY22, management is focused on raising average store sales by monetising its brand and popularity alongside introducing more offerings to satisfy customers’ demands," it said in a report.

       Meanwhile, the Malaysian government's subsidy of 60 sen per kg of farm chicken and five sen per egg during the implementation of Keluara Maximum Price Control Scheme is expected to ease the group's burden of high input cost of feed and relieve consumers of high food inflation.

       According to TA Securities, the estimated subsidy sum to be distributed to Malaysian farmers during the period is about RM500mil.

       In its recently released earnings announcement, Leong Hup said it returned to the black in 4QFY21 with a net profit of RM38mil.

       Over the entire 2021 financial year, the group's core earnings of RM85.4mil was within TA Securities' expectations but below consensus' full-year estimate.

       TA Securities maintained its "buy" call on Leong Hup with an unchanged target price of 91 sen per share.