26/11/2021 (The Star Online) - PETALING JAYA: The prospects of IOI Corp Bhd remain positive for the remainder quarters of its financial year ending June 30, 2022 (FY22), thanks to strong crude palm oil (CPO) prices.

The prices are expected to remain elevated during the early part of 2022 and support the plantation giant’s upstream activities, according to analysts.

“The upstream segment is expected to continue to shine as CPO prices are expected to sustain above RM3,000 per tonne level at least until the first quarter of 2022 due to tight supplies, higher export demand as well as slow growth in production,” MIDF Research said in its report yesterday.

The brokerage maintained a “buy” call on IOI.

However, it cut the target price for the counter to RM5.04 from RM5.30, as it rolled over its valuation to FY23, which pegged IOI’s estimated earnings per share of 17.6 sen against the two-year historical price-earnings ratio (PER) of 28.6 times.

“We remain concerned about the performance of the resource-based manufacturing segment in view of subdued contribution from the group’s oleochemical sub-segment on the back of higher CPO and palm kernel (PK) prices,” MIDF Research said.

“As for the fats sub-segment, we foresee the performance of its associates, Bunge Loders Croklaan Group B.V. improving in the coming quarter given the reopening of economic activities,” it added.

IOI’s net profit was relatively unchanged at RM277.6mil for the first quarter ended Sept 30, 2021 (Q1’FY22), compared with RM277.9mil in Q1’FY21, due to a foreign currency translation loss recorded during the quarter.

Its revenue rose 47% to RM3.63bil in Q1’FY22 versus the RM2.48bil in Q1’FY21.