IS GENP’s generous dividend payout foretelling brighter prospects?

GENTING Plantations Bhd (GENP) sprang a surprise not so much in its FY2020 core net profit (excluding forex and land sale gains) of RM241 mil was very much in line with expectations but with its dividend bounty.

The plantation arm of the Genting group declared a special dividend of 11 sen and a final dividend of 4 sen which brings its total dividend for the year to 21 sen.

The sum, according to CGS-CIMB Research, is significantly above its projection of 10 sen, while representing a dividend payout ratio of 75% of full-year reported net profit.

“The group delivered a strong finish to the year by posting a 38% year-on-year (yoy) rise in its 4Q 2020 core net profit to RM87 mil – its highest since 1Q 2018 – due mainly to higher CPO (crude palm oil) prices,” head of research Ivy Ng Lee Fang pointed out in a results review.

“We raise our net profit forecasts by 42% for FY2021F and 4% for FY2022F to reflect our recently revised CPO price assumptions of RM2,900/RM2,700 per tonne for FY2021/2022F.”

The research house further noted that its sums-of-part (SOP)-based target price for end-2021F improve only 30 sen/share to RM11.20 as the increase in plantation valuation was offset by lower valuations for GENP’s property land bank.

Nevertheless, CGS-CIMB Research retained its “add” call on GENP due to the company’s attractive age profile for its estates.

The dividend surprise poser by GENP could be a prelude that all is well again for the Genting group, buoyed by the recovery theme play.

“While we expect Genting Bhd (GENP’s parent) to post a FY2020F core net loss, we see core net profit rebounding to RM1.1 bil in FY2021F, and further rising by 45% yoy in FY2022F post COVID-19 which should act as re-rating catalysts,” projected CGS-CIMB Research in a gaming sector outlook report dated Feb 8.

At 11.15am, GENP was up 9 sen or 0.97% at RM9.39 with 41,100 shares traded, thus valuing the company at RM8.43 bil.

Meanwhile, Genting was down 5 sen or 1.07% to RM4.61 with 4.35 million shares traded while Genting Malaysia Bhd was down 2 sen or 0.7% to RM2.84 with 4.94 million shares exchanged hands. – Feb 25, 2021

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