29/05/2012 (Borneo Post) - Sarawak Plantation Bhd (SPB), one of the pioneer players in the oil palm industry stock saw its earnings wihin expectations despite ongoing liquidity issues.

The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) noted that SPB’s earnings was within its expectation. SPB earnings in the first quarter of 2012 (1Q12) were in-line with expectation, accounting for 18 per cent and 19 per cent of its full year forecast.

“While other pure planters recorded more than 20 per cent year-on-year (y-o-y) decline in earnings in 1Q12, SPB managed to record a positive earnings growth, albeit marginal, an increase of 0.8 per cent y-o-y to RM16.6 million,” said MIDF Research.

This was mainly attributable to higher sales volume of crude palm oil (CPO) achieved. However, on a quarterly basis, earnings dropped 15.5 per cent due to the weak seasonal factors.

“Higher CPO sales volume was offset by lower average CPO price. SPB’s earnings in 1Q12 were mainly contributed by higher CPO sales volume which jumped 37 per cent y-o-y to 28,071 metric tonnes,” added the research firm.

However, inline with a decline in the market CPO price, SPB’s average the CPO price realised in 1Q12 dropped 13 per cent y-o-y to RM3,100 per metric tonne.

On the other note, SPB continued to be weighed down by liquidity issues, trading below its initial public offering price of RM3 per share.

“We do not foresee the liquidity issue to be addressed by the relevant stakeholders in the short to medium term. Even at current depressed price, we do not expect any move to take the company private,” added the research firm.

Overall, MIDF Research had maintained a fair value of RM3.18 per share, based on 10.4 times earning per share in ending 2012.