Teo Seng Capital Bhd, one of Malaysia's top egg producers, is positioned to benefit from a strong growth trajectory, supported by cost efficiencies and a steady demand driven by population growth and tourism.

Despite the recent drop in egg prices, RHB Investment Bank Bhd (RHB Research) said the company is expected to maintain resilient performance thanks to the ongoing stabilisation of feed costs and the strengthening of the Malaysian Ringgit.

"The company's 13% market share in the Malaysian egg production market and its planned Pahang distribution centre is expected to boost its operational efficiency and margins.

"Furthermore, Teo Seng Capital's ongoing expansion plans, including facility upgrades and an increase in egg output by 9% annually, will help it meet rising demand driven by an expanding population and higher tourist arrivals," RHB Research said, adding that these factors are expected to drive sales quantity growth in the near term.

The research house added that while egg prices have experienced a 14% year-on-year (YoY) drop in 2Q24, with further declines expected in the second half of the year, lower feed costs and a stronger Ringgit should improve profitability.

"These lower input costs, combined with RM's 10% YoY appreciation, are expected to improve profit margins for Teo Seng Capital, positioning it favourably despite external challenges," the research house said.