MARKET DEVELOPMENT
Affin Research Maintains “Reduce†on Genting Plantations, TP at RM8.88
Affin Research Maintains “Reduce†on Genting Plantations, TP at RM8.88
30/05/2013 (The Star) - Affin Research maintains its “Reduce” call on Genting Plantations Bhd with a target price of RM8.88.
It said its 1Q13 revenue increased by 25.8% on-year from higher property revenue, offsetting lower revenue from its plantation division due to lower selling prices for crude palm oil (CPO) which was down 28% to RM2,293mt from RM3,179mt in 1Q12, as well as lower palm kernel, down 40% to RM1,165mt from RM1,941mt.
“In spite of higher revenue from property sales, 1Q13 revenue increased by a marginal 0.9% on-quarter due to sharply lower own fresh fruit bunches (FFB) production, down 21% which more than offset slightly higher selling prices of crude palm oil,” it said.
Affin said its 1Q13 quarter earnings also declined on lower average selling price (ASP) and a one-off RM35mil charitable contributions, as well as higher loss on-year for its Biotechnology division.
“The group's Indonesian plantations broke even in 1Q13 underpinned by crop yield and processing efficiency improvements in itsWest Kalimantan estates while good demand for properties in Genting Indahpura (industrial and commercial offerings) boosted profits for the property division,” it said.
Affin noted higher FFB production, CPO ASP and stable CPO cost of production are expected to boost its profits in the next three quarters.
“The outlook for the property division is excellent given the strong demand for properties in Johor, particularly Iskandar Malaysia, and the groups large land bank of about 5,000 acres in the region. Excluding industrial land sales of RM85m in 1Q13, the group targets new property sales of RM250mil in 2013,” it said.
It said its 1Q13 revenue increased by 25.8% on-year from higher property revenue, offsetting lower revenue from its plantation division due to lower selling prices for crude palm oil (CPO) which was down 28% to RM2,293mt from RM3,179mt in 1Q12, as well as lower palm kernel, down 40% to RM1,165mt from RM1,941mt.
“In spite of higher revenue from property sales, 1Q13 revenue increased by a marginal 0.9% on-quarter due to sharply lower own fresh fruit bunches (FFB) production, down 21% which more than offset slightly higher selling prices of crude palm oil,” it said.
Affin said its 1Q13 quarter earnings also declined on lower average selling price (ASP) and a one-off RM35mil charitable contributions, as well as higher loss on-year for its Biotechnology division.
“The group's Indonesian plantations broke even in 1Q13 underpinned by crop yield and processing efficiency improvements in itsWest Kalimantan estates while good demand for properties in Genting Indahpura (industrial and commercial offerings) boosted profits for the property division,” it said.
Affin noted higher FFB production, CPO ASP and stable CPO cost of production are expected to boost its profits in the next three quarters.
“The outlook for the property division is excellent given the strong demand for properties in Johor, particularly Iskandar Malaysia, and the groups large land bank of about 5,000 acres in the region. Excluding industrial land sales of RM85m in 1Q13, the group targets new property sales of RM250mil in 2013,” it said.