Lower CPO selling price may drag TSH Resources 2H earnings, says Maybank IB
24/08/2022 (New Straits Times), Kuala Lumpur - Maybank Investment Bank (Maybank IB) Research anticipates TSH Resources Bhd's second half of 2022 (2H22) net profit to be lower following the recent crude palm oil (CPO) average selling price (ASP) correction and cost pressures.
The bank-backed research firm said TSH Resources's second quarter (Q2) 2022 headline net profit of RM57 million included a gain on disposal of assets that was offset by impairment of assets, foreign exchange (forex) loss, and fair value (FV) loss on biological assets.
Adjusted, the firm said overall 1H22 net profit met its and consensus expectations at 70 per cent and 62 per cent, respectively.
Meanwhile, Maybank IB said TSH Resources' 1H22 fresh fruit bunch (FFB) output met 47 per cent of the firm's full-year forecast.
"There is potential for 2H22 output to play strong catch up as the strong output in 1H21 was indeed an anomaly.
"We maintain our two per cent year-on-year (YoY) FFB output growth forecast for FY22," it said.
Moving forward, Maybank IB has maintained its net profit forecasts for TSH Resources as it anticipates earnings growth to slow sharply in 2H22.
The research firm said this is due to the recent CPO price correction and cost pressures, especially higher fertiliser prices.
"Nonetheless, 2H headline profits could be further boosted by land disposals in Kalimantan that are being completed in stages.
"Pending clarity, we have yet to factor in these additional land disposal gains in our forecasts.
"Given the lack of FFB growth prospects, TSH Resources remains a Hold with an unchanged target price of 98 sen," it added.