MARKET DEVELOPMENT
Affin Research Maintains Genting Plantations TP at RM11.39
Affin Research Maintains Genting Plantations TP at RM11.39
24/07/2014 (The Star) - Affin Investment Research is maintaining its target price for Genting Plantations at RM11.39 as the share price has been resilient despite weaker crude palm oil (CPO) prices.
It said on Thursday the target price of RM11.39 was at the 17 times calendar year 2015 earnings per share (EPS).
"We maintain our FY14-16 forecasts and ADD rating pending the release of its Q2, FY14 results next month," it said.
Affin Research said the key downside risks include: (i) higher soybean and palm oil production or weaker demand suppressing CPO ASP; (ii) an unforeseen spike in
costs; (iii) unfavourable changes in policies (including biofuel mandates); and (iv) a sharp fall in production due to extreme weather conditions.
It expects the Indonesian estates to spur growth in spite of flattish Malaysian production. The average age of palm trees in Malaysia is about 16 years in Malaysia and less than four years in Indonesia.
Affin Research said Genting Plantations continues to sell its crude palm oil (CPO) at spot, with the Q1,FY14 CPO average selling price of RM2,659 a tonne almost matching the MPOB Peninsular locally-delivered average of
RM2,677 a tonne, despite the discounts in Sabah and Indonesia.
"The all-in cost of production ex-palm kernel credit is expected to decline to RM1,160 a tonne for Malaysia (2013: RM1,322) and RM1,300 for the group (2013: RM1,430) due to the higher palm kernel credit and higher fresh fruit bunches production.
"Contributions from property and 50%-associate Genting Simon are expected to be steady to higher. Take-up rates for property launches in Kulaijaya remain good, and the group is targeting sales of RM200mil to RM300mil in 2014 (2013 sales: RM180mil).
"Unbilled sales as at end-1Q14 were RM75mil and the property contribution in 2014 should be boosted by an undisclosed profit from a land sale concluded in 2013. The completion of Phase II of the Johor Premium Outlet in November 2013 has added 100,000sf of retail space and 50% more new stores," said the research house.
It said on Thursday the target price of RM11.39 was at the 17 times calendar year 2015 earnings per share (EPS).
"We maintain our FY14-16 forecasts and ADD rating pending the release of its Q2, FY14 results next month," it said.
Affin Research said the key downside risks include: (i) higher soybean and palm oil production or weaker demand suppressing CPO ASP; (ii) an unforeseen spike in
costs; (iii) unfavourable changes in policies (including biofuel mandates); and (iv) a sharp fall in production due to extreme weather conditions.
It expects the Indonesian estates to spur growth in spite of flattish Malaysian production. The average age of palm trees in Malaysia is about 16 years in Malaysia and less than four years in Indonesia.
Affin Research said Genting Plantations continues to sell its crude palm oil (CPO) at spot, with the Q1,FY14 CPO average selling price of RM2,659 a tonne almost matching the MPOB Peninsular locally-delivered average of
RM2,677 a tonne, despite the discounts in Sabah and Indonesia.
"The all-in cost of production ex-palm kernel credit is expected to decline to RM1,160 a tonne for Malaysia (2013: RM1,322) and RM1,300 for the group (2013: RM1,430) due to the higher palm kernel credit and higher fresh fruit bunches production.
"Contributions from property and 50%-associate Genting Simon are expected to be steady to higher. Take-up rates for property launches in Kulaijaya remain good, and the group is targeting sales of RM200mil to RM300mil in 2014 (2013 sales: RM180mil).
"Unbilled sales as at end-1Q14 were RM75mil and the property contribution in 2014 should be boosted by an undisclosed profit from a land sale concluded in 2013. The completion of Phase II of the Johor Premium Outlet in November 2013 has added 100,000sf of retail space and 50% more new stores," said the research house.