MARKET DEVELOPMENT
Sarawak Oil Palms’ Shares Drop Despite Earnings Boost
Sarawak Oil Palms’ Shares Drop Despite Earnings Boost
01/03/2016 (Borneo Post) - Shares of Sarawak Oil Palms Bhd (Sarawak Oil Palms) dropped despite the group’s financial year 2015 (FY15) results exceeding the expectations of Maybank Investment Bank Bhd (Maybank IB Research) by 25 per cent led to an affirmation of its growth potential.
Yesterday, the stock dropped two sen to close at RM4.28 per share with 7,000 stocks traded.
According to the research firm, its FY15 results exceeding expectation by 25 per cent was largely attributed to a significant turnaround at its downstream division in the fourth quarter of 2015 (4Q15).
“Its profit after tax and minority interest (PATMI) in 4Q15 of RM44 million boosted FY15’s PATMI to RM85 million which met 125 per cent of our forecast,” it highlighted in a report yesterday.
“The outperformance was largely due to its downstream division which returned to the black with a profit before tax of circa RM22 milion.
“FY15’s overall PATMI was lower year on year largely due to lower average selling prices (ASP) of crude palm oil (CPO) and higher cost of production, but mitigated by higher fresh fruit bunch (FFB) output.”
For the year ahead, Maybank IB Research forecast 40 per cent growth in Sarawak Oil Palms’ earnings per share on higher output and CPO ASP. We continu to like SOP for its long term growth prospects, sweetened by its property development potential arising from its strategic landbank in Miri.”
Sarawak Oil Palms estimated an eight per cent growth in FFB output in 2016 versus Maybank IB Research’s revised 10 per cent growth forecast after the research firm lowered its absolute FFB output forecasts for 2016 and 2017 by five per cent each respectively due to the impact of drier weather in 2015.
“The 10 per cent FFB output growth will emanate from new areas entering maturity and young palm trees entering prime maturity. After imputing also higher production cost, we cut our FY16/17 earnings per share forecasts by 23 per cent and 21 per cent respectively.
“That said, we still expect SOP to deliver earnings growth in FY16, driven by higher CPO ASP forecasted at RM2,300 per tonne.
“Pegging its long term fundamentals intact, the research house continued to like Sarawak Oil Palms for its growth potential, integrated business model, and strategic landbank in Miri city that is prime for development in the next property upcycle.
“Maintain BUY with a revised target price of RM5.28. The valuation methodology change is to better reflect its intrinsic value.”
Yesterday, the stock dropped two sen to close at RM4.28 per share with 7,000 stocks traded.
According to the research firm, its FY15 results exceeding expectation by 25 per cent was largely attributed to a significant turnaround at its downstream division in the fourth quarter of 2015 (4Q15).
“Its profit after tax and minority interest (PATMI) in 4Q15 of RM44 million boosted FY15’s PATMI to RM85 million which met 125 per cent of our forecast,” it highlighted in a report yesterday.
“The outperformance was largely due to its downstream division which returned to the black with a profit before tax of circa RM22 milion.
“FY15’s overall PATMI was lower year on year largely due to lower average selling prices (ASP) of crude palm oil (CPO) and higher cost of production, but mitigated by higher fresh fruit bunch (FFB) output.”
For the year ahead, Maybank IB Research forecast 40 per cent growth in Sarawak Oil Palms’ earnings per share on higher output and CPO ASP. We continu to like SOP for its long term growth prospects, sweetened by its property development potential arising from its strategic landbank in Miri.”
Sarawak Oil Palms estimated an eight per cent growth in FFB output in 2016 versus Maybank IB Research’s revised 10 per cent growth forecast after the research firm lowered its absolute FFB output forecasts for 2016 and 2017 by five per cent each respectively due to the impact of drier weather in 2015.
“The 10 per cent FFB output growth will emanate from new areas entering maturity and young palm trees entering prime maturity. After imputing also higher production cost, we cut our FY16/17 earnings per share forecasts by 23 per cent and 21 per cent respectively.
“That said, we still expect SOP to deliver earnings growth in FY16, driven by higher CPO ASP forecasted at RM2,300 per tonne.
“Pegging its long term fundamentals intact, the research house continued to like Sarawak Oil Palms for its growth potential, integrated business model, and strategic landbank in Miri city that is prime for development in the next property upcycle.
“Maintain BUY with a revised target price of RM5.28. The valuation methodology change is to better reflect its intrinsic value.”