MARKET DEVELOPMENT
Hap Seng Plantations 4Q profit soars 155% on higher CPO prices, pays 15.5 sen dividend
Hap Seng Plantations 4Q profit soars 155% on higher CPO prices, pays 15.5 sen dividend
23.02.2022 (www.theedgemarkets.com) - KUALA LUMPUR (Feb 23): Hap Seng Plantations Holdings Bhd’s net profit for the fourth quarter ended Dec 31, 2021 jumped 155.22% to RM94.31 million from RM36.95 million a year ago, underpinned by higher palm oil prices.
Revenue for the quarter rose 27.12% to RM194.83 million from RM153.27 million a year ago, it said in a bourse filing on Wednesday (Feb 23).
For the full year ended Dec 31, 2021 (FY21), net profit surged 148.1% to RM224.02 million from RM90.3 million a year earlier, while revenue increased by 43.47% to RM670.85 million from RM467.6 million.
The group has proposed a second interim dividend of 15.5 sen for the latest quarter, bringing total dividends for FY21 to 17 sen. The dividend will be paid on March 23, 2022.
The group said the improved revenue for the latest quarter was driven by higher average selling prices realisation of crude palm oil (CPO) and palm kernel (PK) albeit with lower sales volume for both products.
According to the group, the average selling price per tonne of CPO and PK for the current quarter were significantly higher at RM5,103 and RM3,762 respectively compared to the preceding year's corresponding quarter of RM3,148 (CPO) and RM2,027 (PK).
CPO sales volume for the current quarter, however, was 30,972 tonnes, which was 26% lower year-on-year, whilst PK sales volume was 10% lower at 8,430 tonnes mainly attributable to lower CPO and PK production and timing of deliveries.
Production of CPO and PK for the current quarter was also lower than the preceding year's corresponding quarter by 6% and 8% respectively due to lower fresh fruit bunches (FFB) production and lower FFB purchased, mitigated somewhat by higher CPO and PK extraction rates.
Meanwhile, FFB production for the current quarter was 7% lower than the preceding year's corresponding quarter as FFB yield was affected by the seasonal yield trend and cropping patterns.
The group expects its results for FY22 to be influenced by movements in commodity prices and uncertainties in the global economies caused by the prolonged Covid-19 pandemic and effectiveness of global containment measures.
“Palm oil industry analysts expect current CPO prices to be supported in the short term in view of the low palm oil production season in the first quarter of 2022, exacerbated by delays in foreign workers intake in Malaysia to mitigate the existing labour shortage in the industry.
“In addition, the severe drought in South America affecting harvest and river transportation of its major summer crops of corn and soybeans will impact global supply of edible oils and push its prices up,” the company said.
It also noted the Indonesian government’s new domestic market obligation policy on palm oil exports implemented on Jan 27, 2022, which aims to control the domestic supply of vegetable oils and their prices, requires exporters of palm oil products to sell 20% of their planned total export volume domestically. This would further reduce Indonesian CPO exports and boost demand for Malaysia’s CPO.
It also said Malaysian palm oil inventories decreased by 3.9% to 1.552 million tonnes at end January 2022 from 1.615 million tonnes at end December 2021 in tandem with the lower production.
“The global supplies of edible oils remain tight due to lower-than-expected production which has pushed edible oil prices to an unprecedented high.”
According to the group, the monthly average CPO price was at its highest at RM5,354.50 per tonne in January 2022, and daily CPO price up to Feb 18, 2022 reached a record high of RM6,027.50 per tonne, supported by demand from India with the reduction by the Indian government on its agriculture infrastructure and development tax on crude palm oil from 7.5% to 5% with effect from Feb 13, 2022 to help its domestic palm oil refiners and consumers.
Hap Seng Plantations shares closed unchanged at RM2.35 on Wednesday, valuing the group at RM1.92 billion.
Year to date, the counter has risen 18.09%.