Summary

• Earnings within expectation. YENHER registered core PATMI of RM6.9m in 2Q26, rising by 26.9% QoQ and 33.3% YoY. 1HFY26 core PATMI increased by 46.8% YoY to RM12.4m, accounting for 50.4% of our FY26f earnings forecast of RM24.6m and 49.6% of consensus earnings estimate of RM25.0m. We deem the results broadly in-line, as stronger distribution sales and improved gross profit more than offset weaker manufacturing revenue.
• Dividend. 1.5sen per share is announced. The entitlement date to be determined.  
• YoY. Revenue eased by 0.6% to RM78.4m, as manufacturing revenue fell 22.1% YoY to RM27.4m, partly offset by a 16.7% increase in distribution revenue to RM51.1m, driven by stronger feed additive sales. Gross profit rose by 15.7% to RM16.0m, lifting core PATMI by 33.3% to RM6.9m.
• QoQ. Revenue increased by 28.5% QoQ, led by a 60.6% increase in distribution revenue to RM51.1m, while manufacturing revenue declined by 6.5% to RM27.4m. Core PATMI grew by 26.9% QoQ despite higher selling and distribution expenses, reflecting stronger gross profit and operating leverage.
• YTD. For 1HFY26, revenue declined by 7.0% YoY to RM139.5m, but PBT and core PATMI increased by 48.2% and 46.8% YoY to RM16.4m and RM12.4m, respectively, driven by stronger distribution performance and the absence of a RM1.78m inventory write-off in 1QFY25.
• Outlook. Management maintains a cautious yet steady FY26 outlook, underpinned by resilient poultry demand. Geopolitical tensions, economic uncertainty, fuel and commodity price volatility, and shipping or supply-chain disruptions may continue to pressure costs. The new GMP-compliant plant remains on track for completion by end-2026 and is designed to triple capacity to 31,200 tonnes per annum, while the BSF venture commenced production in June 2026.

Valuation & Recommendation

• Forecast. Maintained.
• Maintained BUY with an unchanged TP of RM0.98. We reiterate our BUY rating for YENHER with a TP of RM0.98. 1HFY26 core PATMI reached 50.5% of our FY26f forecast, supporting our view that earnings remain on track. Our valuation is based on a 12.0x P/E ratio, pegged to FY26f core EPS of 8.21 sen.
• Downside risks. Risks to our recommendation include: (i) livestock disease outbreaks (e.g., ASF, avian flu), (ii) raw material price and forex volatility, (iii) supply-chain and geopolitical disruptions, (iv) completion delays or cost overruns for the new GMP plant, (v) execution risks associated with the BSF venture and capacity expansion, (vi) high concentration in the domestic Malaysian market, and (vii) tightening regulatory or food safety standards.