BUOYED by spiralling crude palm oil prices which have breached the RM6,000/metric tonne (MT) mark, analysts have turned bullish on Genting Plantations Bhd (GENP).
Hong Leong Investment Bank (HLIB) Research deemed GENP’s FY2021 core net profit of RM436.3 mil (+81.1%) as beating expectations by exceeding consensus and its estimates by 10.3/16.4% due mainly to higher-than-expected realised palm product prices and better-than-expected performance at its downstream segment.
As such, it raised GENP’s FY2022-2204 core net profit forecasts by 43.7%, 17.6% and 19.9% respectively mainly to account for higher CPO price (RM4,300/MT for FY2022 and RM3,300/MT for FY2023-2024) and marginally higher production cost assumptions at plantation segment and higher EBIT (earnings before interest and taxes) margin assumption at the downstream segment.
“Post earnings revision, we maintain our “buy” rating on GENP with a higher sum-of-parts target price of RM9.69 (from RM8.89 previously),” projected analyst Chye Wen Fei in a results review.
In view of its strong performance, GENP has recommended a final dividend per share (DPS) of 4 sen and a special DPS of 15 sen which brings its total DPS for FY2021 to 30 sen.
Meanwhile, MIDF Research expects current CPO price to continue supporting the group’s earnings growth momentum. All factors considered, the research house retained its “buy” stance on GENP by revising upward its target price to RM9.43 (from RM9.02 previously).
“Despite lower production of FFB (fresh fruit bunces) in the current quarter, we anticipate a recovery in FFB yield moving forward due to (i) replanting activities; and (ii) better age profile where FFB yield would increase as trees come into maturity soon,” justified analyst Shahira Rahim.
“On top of that, we also expect the property segment to continue to record better performance in anticipation of resumption in economic activities.”
Kenanga Research also maintained its “outperform” rating on GENP with a new SOP (sum-of-part)-based target price of RM10 (from RM8.40 previously) after revising upward the company’s FY2022E core EPS (earnings per share) by 55% to 62.9 sen and FY2023E core EPS by 36% to 55.4 sen..
“We are also expecting flattish DPS of 30.0 sen and 28.0 sen for FY22-23 respectively, thanks to strong cash flows underpinned by elevated CPO prices as well as decent FFB output growth,” noted analyst Teh Kian Yeong.
“The coming to maturity and expanding productive area in Indonesia should continue to support its upstream earnings while the ongoing economic recovery should slowly lift property and Premium Outlets’ earnings.”
At 9.58am, GENP was up 37 sen or 4.4% to RM8.77 with 305,300 shares traded, thus giving the company a valuation of RM7.87 bil. – Feb 24, 2022
