KUALA LUMPUR, Feb 7 — Research houses are maintaining their ’hold’ call on Sime Darby Plantation Bhd (SDPL) after the United States (US) Customs and Border Protection (USCBP) cleared the plantation company from forced labour allegations.
In a research note today, Hong Leong Investment Bank said the latest development would allow SDPL to resume exports of its palm oil products to the US, although the impact on SDPL — both in terms of earnings and share price — would likely be insignificant.
“HLIB views this as a positive development and we maintain earnings forecasts on SDPL, as well as the ‘hold’ rating and the target price (TP) of RM4.49,” it said.
Meanwhile, Maybank Investment Bank Bhd expect SDPL to turn in a better quarter-on-quarter (q-o-q) core net profit (NP) at RM597 million for the fourth quarter of 2022 (4Q 2022), which would be on track to meet its/the consensus financial year 2022 core NP forecasts of RM2.271 billion/RM2.25 billion, respectively.
“Its performance will be underpinned by higher sales volume — especially in Papua New Guinea and Indonesia — owing to the huge inventory on its balance sheet as of end-Sept 2022.
“Additionally, its performance will also be driven by the forward sales locked in earlier at higher than crude palm oil (CPO) spot average selling price in 4Q, and lower unit cost of production owing to a slowdown in manuring activities in 4Q due to wet weather,” it added.
Hence, Maybank maintained its ‘hold’ call on SDPL, with a TP of RM4.43.
At 11.36, Sime Darby Plantation added six sen to RM4.49 with 477,100 shares traded. — Bernama
