MARKET DEVELOPMENT
Higher Harvesting of FFB to Boost United Malacca’s Earnings
Higher Harvesting of FFB to Boost United Malacca’s Earnings
23/12/2013 (Borneo Post) - United Malacca Bhd’s (United Malacca) prospects remains strong, supported by higher harvesting of fresh fruit bunches (FFB) in the second half of financial year 2014 (2HFY14) and improving crude palm oil prices (CPO) which is expected to boost the sales of its palm oil products.
The research arm of TA Securities Holdings Bhd (TA Securities Research) in a report said the company’s FFB harvest is expected to go up in 2HFY14 due to higher matured plantations.
Thus, the research firm expected higher production of FFB in the 2HFY14 and increased harvesting of FFB to grow by three to four per cent in FY14.
TA Securities Research said the company’s year-to-date FFB harvest has been marginally affected by its plantations in Sabah due to below than average rainfall earlier this year.
On the other hand, the research firm noted that United Malacca’s CPO production increased 8.2 per cent year-on-year due to higher third party FFB purchase.
Meanwhile, United Malacca in a filing with Bursa Malaysia on December 19 said its net profit in the second quarter of financial year 2014 (2QFY14) dropped 21 per cent y-o-y to RM18.96 million from RM23.89 million.
In contrast, its revenue rose 9.1 per cent y-o-y in 2QFY14. TA Securities Research noted that the company’s earnings declined as a result of lower CPO prices.
Interestingly, on a quarterly basis, the research firm observed that United Malacca’s net profit rose 36.2 per cent quarter-on-quarter (q-o-q) to RM18.96 million compared with RM13.92 million in 1QFY14.
The research firm noted that the higher quarterly earnings recorded was due to increase in FFB harvest as well as the impact of the rally in palm kernel prices which translated into higher sales.
TA Securities Research observed that despite the company’s lower earnings in 2QFY14, United Malacca had maintained its dividend payment of 10 sen per share, similar to previous year corresponding quarter.
Therefore, it remains optimistic on the outlook of the company valuing the company’s share price at RM7.94 per share based on price-to-earnings ratio of 17 times.
The research arm of TA Securities Holdings Bhd (TA Securities Research) in a report said the company’s FFB harvest is expected to go up in 2HFY14 due to higher matured plantations.
Thus, the research firm expected higher production of FFB in the 2HFY14 and increased harvesting of FFB to grow by three to four per cent in FY14.
TA Securities Research said the company’s year-to-date FFB harvest has been marginally affected by its plantations in Sabah due to below than average rainfall earlier this year.
On the other hand, the research firm noted that United Malacca’s CPO production increased 8.2 per cent year-on-year due to higher third party FFB purchase.
Meanwhile, United Malacca in a filing with Bursa Malaysia on December 19 said its net profit in the second quarter of financial year 2014 (2QFY14) dropped 21 per cent y-o-y to RM18.96 million from RM23.89 million.
In contrast, its revenue rose 9.1 per cent y-o-y in 2QFY14. TA Securities Research noted that the company’s earnings declined as a result of lower CPO prices.
Interestingly, on a quarterly basis, the research firm observed that United Malacca’s net profit rose 36.2 per cent quarter-on-quarter (q-o-q) to RM18.96 million compared with RM13.92 million in 1QFY14.
The research firm noted that the higher quarterly earnings recorded was due to increase in FFB harvest as well as the impact of the rally in palm kernel prices which translated into higher sales.
TA Securities Research observed that despite the company’s lower earnings in 2QFY14, United Malacca had maintained its dividend payment of 10 sen per share, similar to previous year corresponding quarter.
Therefore, it remains optimistic on the outlook of the company valuing the company’s share price at RM7.94 per share based on price-to-earnings ratio of 17 times.