Genting Plantations gets 2022 earnings upgrade from MIDF Research

KUALA LUMPUR: MIDF Research has adjusted its earnings forecast for financial year 2022 (FY22)-FY23 for Genting Plantations Bhd as elevated crude palm oil (CPO) price is expected to amplify the company’s topline. 

MIDF Research expects the company’s topline to grow 24 per cent year-on-year (YoY) and drop six per cent YoY to RM3.9 billion and RM3.7 billion respectively while bottomline to increase 18 per cent and drop 14 per cent to RM547 million and RM470.9 million.

“Looking at its first quarter (Q1) performance, Genting Plantations’ revenue was slightly lower on account of lower sales volume recognised from the downstream manufacturing segment. 

“However, the company managed to achieve a higher average selling price of CPO and palm kernel to RM4,797/metric tonne (mt) (up 64 per cent yoy) and RM4,114/mt (up 83 per cent yoy) during the quarter. 

“We forecast Genting Plantations to post sustained double-digit growth in profit before tax of 15 per cent over FY22 as we posit cost to remain under control with 40 per cent fertiliser and 30 per cent labour structure as management guided, in anticipation of higher ASP CPO able to compensate rising input cost, ” it said in a note. 

Following a more maturity age profile of 117,329 hectares (ha) and 18,084 ha coming into Malaysia and Indonesia estates this year, the firm expected the group’s matured area to improve to 135,413 ha in 2022 resulting fresh fruit bunches yield to touch 17.3/mature ha in FY22. 

This would aid production to register at 2,342,645 mt/ha. 

“Genting Plantations’ oil palm planted area stood at 159,318 ha in FY21, with matured registered at 134,313 ha and immature area around 25,005 ha. 

“The average oil palm age profile of 11.9 years of the group is relatively ideal in FY21 with approximately 58 per cent prime mature and 48 per cent of past prime age, while the remaining is young mature 12 per cent. 

“We believe that this is a fairly mature profile that may provide visible revenue and earnings growth moving forward,” it said. 

The firm maintained its “Buy” call with revised target price of RM8.00 from RM10.10 previously.

Source: New Straits Times


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