Poultry Sector Resilient Despite Heavy Reliance on Imported Feed

Malaysia’s poultry sector remains a key pillar of the nation’s food security framework, supported by strong domestic production and resilient consumer demand for affordable protein.

According to MBSB Research, Malaysia maintains chicken self-sufficiency levels of approximately 91% to 93%, while egg production remains in surplus at around 107%. This provides a strong foundation for the sector despite ongoing global supply chain uncertainties and commodity market volatility.

However, the industry continues to face significant exposure to imported feed ingredients. Malaysia produces only around 0.2% of its maize requirements, resulting in a 99.8% reliance on imports. Meanwhile, soybean and soybean meal, which are essential components of poultry feed, are almost entirely sourced from overseas markets, particularly Brazil, Argentina and the United States.

Poultry Sector

Feed costs remain the largest operational expense for poultry producers. MBSB Research noted that raw materials account for between 83% and 85% of feed mill production costs at Leong Hup International. Corn and soybean meal alone make up roughly 70% of poultry feed costs, highlighting the sector’s sensitivity to fluctuations in global agricultural commodity prices and foreign exchange movements.

Despite these challenges, demand for poultry products is expected to remain defensive given chicken’s status as the country’s primary and most affordable source of animal protein. Nevertheless, profitability may remain volatile when increases in feed costs outpace adjustments in selling prices.

MBSB Research believes integrated poultry operators are better positioned to navigate such challenges due to their economies of scale, feed-milling capabilities, breeder and hatchery operations, supply chain integration and stronger access to working capital.

Among its sector preferences, MBSB Research maintains a positive view on Leong Hup International with a target price of RM1.03, citing its integrated business model and operational scale. QL Resources remains rated Neutral with a target price of RM4.11.

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