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Bimb Research Highlights

Author: kltrader   |   Latest post: Wed, 6 Nov 2019, 4:40 PM

 

IOI Corporation - Core Profit Within Expectation

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  • Overview. IOI’s reported a lower 4Q19 core profit of RM154m due mainly to lower contribution from plantation segment and lower share of profit from associate, Bunge Loders. On qoq basis, the lower profit was a result of lower contribution from plantation segment on account of lower FFB production and ASP realised of palm products as well as lower margins from refining sub-segment in Resourcesbased Manufacturing (RBM) segment.
  • Against estimates: inline. 1H19 core profit was in line at 95% of estimates as lower contribution from plantation segment was mitigated by higher contribution from RBM segment. The lower profit from plantation segment is due to fall in CPO and PK realised price as well as lower FFB production. On the other hand, higher profit from RBM segment was attributed to higher contribution from all subsegments and higher share of result from associate.
  • Dividend. The Board has proposed a final dividend of 4.5sen on 15 Aug 2019, bringing its total DPS to-date, FY19 of 8.0sen (FY18: 20.5sen inclusive a special dividend of 11.5sen per share).
  • Outlook. We believe RBM segment would continue to perform well and act as buffer against potential downside risk from plantation segment. Management foresee the oleo-chemical sub-segment to sustain its performance due to the moderately low feedstock cost.
  • Our call. Maintain BUY with TP of RM5.00. Off note, we have revised our FY20 and FY21 earnings forecast lower to RM789m and RM1b respectively as we adjusted our ASP of palm product lower by 6%-8%.

Source: BIMB Securities Research - 16 Aug 2019

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