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Author: MalaccaSecurities   |   Latest post: Wed, 2 Dec 2020, 8:39 AM

 

Kim Loong Resources Bhd - Improving Prospects

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Results Review
Kim Loong’s 3QFY20 net profit fell 18.1% Y.o.Y to RM13.8 mln, dragged down by the lower production in the plantation segment, coupled with the fall in average selling prices (ASP) of fresh fruit bunches (FFB) and crude palm oil (CPO) in the palm oil mill segment. Revenue for the quarter declined 23.0% Y.o.Y to RM175.3 mln.

For 9MFY20, cumulative net profit slipped 21.0% Y.o.Y to RM38.7 mln. Revenue for the period contracted 26.1% Y.o.Y to RM498.6 mln. The results came in below expectations with its net profit only amounting to 62.9% of our previous full-year forecast of RM61.5 mln, while its revenue also came below our expectations, amounting to 63.0% of our previous FY20 estimate of RM791.2 mln. The bottom line’s variance is due to the lower production and weak ASP of CPO.

Segment wise in 3QFY20, its plantation segment EBIT sank 55.5% Y.o.Y to RM4.6 mln on lower ASP of FFB and lower production. The milling operations segment’s EBIT fell 4.4% Y.o.Y to RM13.5 mln, dragged down by the fire incident at the Kota Tinggi mill that has sinced production fully restored in August 2019.

Despite the weaker-than-expected earnings, KLR continues to maintain a strong balance sheet, backed by with cash holdings of RM180.5 mln as oppose to a total borrowings of RM15.6 mln in 3QFY20

Source: Mplus Research - 30 Dec 2019

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