Termination of egg subsidy uplifts poultry stocks
CGSI Research raised concerns that the removal of the egg subsidies could impact QL Resources' expansion plans.
PETALING JAYA: The stock market reacted positively to the removal of the subsidy and price control for chicken eggs, with most poultry stocks rising following the announcement by the Agriculture and Food Security Ministry.
However, the largest listed poultry company by market capitalisation – QL Resources Bhd – declined marginally by 0.21% to RM4.80, valuing the group at RM17.5bil.
Last December, CGS International (CGSI) Research raised concerns that the removal of the egg subsidies could impact QL Resources' expansion plans.
It estimated that the group's pre-tax margins could ease by 0.4% year-on-year to 9.1% in the financial year 2026 (FY26), as the egg subsidies are reduced.
Nonetheless, the decision to end egg subsidies lifted other poultry players.
Teo Seng Capital Bhd , which produces more than four million chicken eggs daily, saw its share price hitting the highest level in over a month.
The stock rose by 5.15% to RM1.02, while shares of PWF Corp Bhd and Lay Hong Bhd climbed by 4.61% and 4.69%, respectively.
Other poultry stocks that moved north were Leong Hup International Bhd (1.63%), CCK Consolidated Holdings Bhd (1.55%) and Malayan Flour Mills Bhd (2.02%).
CAB Cakaran Corp Bhd's share price remained unchanged at 53.5 sen after paring down earlier losses during the day.
In a statement, the government announced the decision to scrap the price control on chicken eggs and reduce the egg subsidy rate from 10 sen to five sen per egg, effective today.
Subsequently, the egg subsidy will be completely abolished on Aug 1, 2025.
From February 2022 to December 2024, the government spent nearly RM2.5bil on egg subsidies to the industry to cover rising production costs due to the Covid-19 pandemic and the impact of the Ukraine-Russia war on the import prices of soybeans and corn.
In deciding to remove the price control and subsidy, the Agriculture and Food Security Ministry said it has also taken into account that the prolonged period of price controls and subsidies is unsustainable for the continuity of the local egg production industry and the country's finances.
'The decision was taken after taking into consideration the industry's commitment to ensure enough supplies and costs which had stabilised,' according to the ministry.
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