MARKET DEVELOPMENT
KLK Dragged By Lower CPO, Rubber Prices — Analysts
KLK Dragged By Lower CPO, Rubber Prices — Analysts
22/08/2013 (Borneo Post) - Kuala Lumpur Kepong Bhd (KLK) saw earnings of RM630 million for the nine months for financial year 2013 (9MFY13), dragged by crude palm oil (CPO) and rubber prices.
An analyst from the research division of Kenanga Investment Bank Bhd (Kenanga Research), Alam Lim stated that CPO prices for the first half this year traded below estimates of RM2,500 per metric tonne (pmt) due to the stronger-than-expected decline in soybean prices.
“Rubber prices are also lower than expected due to a slowdown in the Chinese economy which may have affected demand for car tyres there,” Lim outlined.
“Year on year (y-o-y), KLK’s core net profit for 9MFY13 declined 26 per cent to RM630 million as CPO prices dropped 20 per cent to RM2,268pmt.
“This was mitigated by 15 per cent fresh fruit bunch (FFB) growth to 2.69 million mt and better earnings from its downstream division.”
To note, the group has plantation landbank in Peninsular Malaysia, Sabah and in Indonesia.
On a quarter on quarter (q-o-q) comparison, the group’s 3QFY13 core net profit slipped 21 per cent to RM164 million due to unexpected lower FFB production (down 13 per cent to 747,000 mt) and lower earnings from downstream division (down 15 per cent to RM71 million).
An analyst from the research division of Kenanga Investment Bank Bhd (Kenanga Research), Alam Lim stated that CPO prices for the first half this year traded below estimates of RM2,500 per metric tonne (pmt) due to the stronger-than-expected decline in soybean prices.
“Rubber prices are also lower than expected due to a slowdown in the Chinese economy which may have affected demand for car tyres there,” Lim outlined.
“Year on year (y-o-y), KLK’s core net profit for 9MFY13 declined 26 per cent to RM630 million as CPO prices dropped 20 per cent to RM2,268pmt.
“This was mitigated by 15 per cent fresh fruit bunch (FFB) growth to 2.69 million mt and better earnings from its downstream division.”
To note, the group has plantation landbank in Peninsular Malaysia, Sabah and in Indonesia.
On a quarter on quarter (q-o-q) comparison, the group’s 3QFY13 core net profit slipped 21 per cent to RM164 million due to unexpected lower FFB production (down 13 per cent to 747,000 mt) and lower earnings from downstream division (down 15 per cent to RM71 million).