MARKET DEVELOPMENT
KLK Shares Edge Higher On Expansion Plan
KLK Shares Edge Higher On Expansion Plan
15/04/2014 (Bernama) - Kuala Lumpur Kepong Bhd (KLK) shares moved higher Monday following its announcement of a venture in Liberia.
At 10.28 am, KLK shares edged up six sen to RM23.98, with 26,400 shares changing hands.
On Friday, KLK announced that its subsidiaries, KLK Agro Plantations Pte Ltd (KLK Agro) and Equatorial Biofuels (Guernsey) Ltd (EBGL), will each subscribe for US$7.5 million (about RM24 million) of the share capital in Liberian Palm Development Ltd (LPD) on a 50:50 proportion of shareholdings.
KLK Agro is a wholly-owned unit of KLK while EBGL is effectively 63.2 per cent-owned by KLK.
KLK in a filing to Bursa Malaysia said the move was in line with the company's strategy to expand its plantation landbank outside Malaysia and Indonesia.
Kenanga Research said as 3,570 hectares (ha) or 15 per cent of the 25,547ha of LPD landbank is already planted, the capital injection from KLK would likely be used to plant the remaining 85 per cent of the landbank, and this was expected to yield positively in the longer term.
"We are positive in longer term as earnings impact would likely be from financial year 2018 onwards," it said in a research note Monday.
It said the forecast was based on expectation that the palm trees would start bearing fruits from the third year onwards and the field preparation work might take up to one year.
Kenanga Research has maintained KLK's financial years 2014 and 2015 core earnings expectations at RM1.3 billion and RM1.36 billion respectively.
It has also maintained its "Outperform" call and target price of RM26.10 on the stock.
At 10.28 am, KLK shares edged up six sen to RM23.98, with 26,400 shares changing hands.
On Friday, KLK announced that its subsidiaries, KLK Agro Plantations Pte Ltd (KLK Agro) and Equatorial Biofuels (Guernsey) Ltd (EBGL), will each subscribe for US$7.5 million (about RM24 million) of the share capital in Liberian Palm Development Ltd (LPD) on a 50:50 proportion of shareholdings.
KLK Agro is a wholly-owned unit of KLK while EBGL is effectively 63.2 per cent-owned by KLK.
KLK in a filing to Bursa Malaysia said the move was in line with the company's strategy to expand its plantation landbank outside Malaysia and Indonesia.
Kenanga Research said as 3,570 hectares (ha) or 15 per cent of the 25,547ha of LPD landbank is already planted, the capital injection from KLK would likely be used to plant the remaining 85 per cent of the landbank, and this was expected to yield positively in the longer term.
"We are positive in longer term as earnings impact would likely be from financial year 2018 onwards," it said in a research note Monday.
It said the forecast was based on expectation that the palm trees would start bearing fruits from the third year onwards and the field preparation work might take up to one year.
Kenanga Research has maintained KLK's financial years 2014 and 2015 core earnings expectations at RM1.3 billion and RM1.36 billion respectively.
It has also maintained its "Outperform" call and target price of RM26.10 on the stock.