KUALA LUMPUR, Feb 5 — Kenanga Research today reiterated its “Market Perform” call on IJM Plantations Bhd as it opined that the oil palm company would fare better than other planters.
The research firm also maintained its core net profit (CNP) calculation estimate for IJM Plantations’ financial year (FY) 2015-2016 at between RM158 million to RM164 million.
Kenanga Research said IJM Plantations has excellent fresh fruit bunches (FFB) growth prospects in Indonesia, which is targeted to jump more than two times to 350,000 metric tons (MT) by FY16E,” it said in a note today.
For the local business, it expects flattish growth in Malaysian plantations which limits overall FFB growth to 11 per cent year-on-year.
It said IJM Plantations’ capital expenditure of between RM150 million and RM200 million yearly was over 80 per cent focused on Indonesia, and crude palm oil (CPO) production cost per tonne is likely to be flattish due to rising labor costs.
This is despite the flat fertiliser and logistics costs.
IJM Plantation might also suffer RM9.0 million in foreign exchange translation losses, although this is typically excluded from CNP calculations, it said.
“We maintain our earnings estimate as the FFB production guidance between 830 million and 940 million metric tonnes (MT) and CPO cost of RM1,560/MT are in line with our estimates.
“Our earnings estimate is above consensus expectations of between RM130 million and RM153 million, which we think under-appreciates IJM Plantations’ strong FFB growth prospects,” it added.
As at 10.17 am, IJM Plantations’ shares stood at RM3.50. — Bernama
