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United Plantations rises on record earnings, as analyst sees CPO prices averaging at RM4,000/mt in 2024
calendar28-02-2024 | linkThe Edge Malaysia | Share This Post:

27/02/2024 (The Edge Malaysia), Kuala Lumpur - Perak-based plantation firm United Plantations Bhd's share price rallied further to reach a record high on Tuesday, after the company reported record earnings and dividends for the financial year ended Dec 31, 2023 (FY2023).


It was the fifth top gainer on Bursa, as the counter climbed as much as 44 sen to a high of RM21.36, before paring some gains to settle at RM21.14 for a net increase of 22 sen or 1.05% after 386,900 shares were done. In contrast, the FBM KLCI was up 0.72%.


The counter has risen over 18% since the start of this year, and more than 28% in the past year.


Apex Securities Bhd, the only research house covering the stock, said the group’s FY2023 net profit beat the research house’s expectations by 133% as it had underestimated the recovery in crop production in 4Q2023, while the improvement in United Plantations’ operating margin was higher than expected.


“For 2024, we anticipate further strengthening of crude palm oil (CPO) prices averaging at RM4,000/mt as CPO production remains stagnant. Palm oil inventory is also expected to fall, fuelled by festive season consumption and heightened biodiesel demand,” said the research house.


Following the better than expected FY2023 results, Apex Securities has revised its FY2024 earnings forecast upwards by 16%. It also upgraded United Plantations to “buy” (from “hold”) and assigned a higher target price of RM23.57 (from RM17.66).


United Plantations’ FY2023 net profit climbed 17.33% to a record high of RM711 million against RM606 million in FY2022, mainly due to higher commodity prices and the group's efforts in optimising yields, with a "commendable performance recorded for the downstream segment".


The group declared a gross special dividend of 40 sen per share and final dividend of 70 sen per share. Total dividend payout in FY2023 jumped to a record high of RM1.90, translating into a gross dividend yield of 9.1%.