KUALA LUMPUR, Aug 27 — CGS-CIMB is keeping its ‘add’ call and unchanged target price (TP) of RM10.70 on Genting Plantations Bhd, as it sees the company’s Indonesia estates returning to their growth trajectory in 2021.
In a research note, it said this is due to the young profile of the tress at 8.5 years.
“Potential re-rating catalysts are higher crude palm (CPO) prices and better fresh fruit bunches (FFB) yields from its estates. Downside risks are lower CPO prices and FFB yields,” said the integrated financial service provider.
Meanwhile, MIDF Research said it expects the favourable CPO prices and recovery in FFB production to further support the earnings growth momentum in the coming quarters.
In the first half (1H) of financial year (FY) 2020, the company’s earnings increased, mainly attributable to the recovery in average selling price (ASP) of CPO and crude palm kernel oil (CPKO), which rose 26.0 per cent year-on-year (yoy) to RM2,465 per tonne and 20 per cent yoy to RM1,439 per tonne, respectively.
“We are of the view that the group will be able to continue to maintain a healthy profit margin given the elevated CPO price on a year-over-year basis,” said MIDF Research.
It also foresees a gradual rebound in the property segment in 2H of calendar year (CY) 2020 on the resumption of economic activities post-movement control order (MCO) and the revival of the Home-Ownership campaign as announced by the Malaysian Government.
The research firm is maintaining a ‘buy’ rating for Genting Plantations, which is a shariah-compliant stock, with an unchanged TP of RM12.10.
As at 10.50 am, the company’s share price was untraded and stayed flat at RM9.90 per share. — Bernama