Highlights

HLBank Research Highlights

Author: HLInvest   |   Latest post: Mon, 25 Jan 2021, 1:23 PM

 

Sime Darby Plantation - Boosted by higher palm product prices

Author:   |    Publish date:


3Q20 core net profit of RM284m (QoQ: +115.2%; YoY: +317.6%) took 9M20 core net profit to RM594m (+786.6%). The results beat expectations, accounting or 86.5-116.6% of consensus and our full-year estimates, due mainly to higherthan-expected realised average CPO price. We raise FY20 core net profit forecast by 55.4% to RM791.4m, mainly to account for higher CPO prices YTD. We maintain our FY21-22 core net profit forecasts for now, pending a review in our average CPO price assumptions post results season. Maintain HOLD with unchanged SOP-derived TP of RM4.63.

Beat expectations. 3Q20 core net profit of RM284m (QoQ: +115.2%; YoY: +317.6%) took 9M20’s sum to RM594m (+786.6%). The results beat expectations, accounting or 86.5-116.6% of consensus and our full-year estimates, due mainly to higher-thanexpected realised average CPO price.

Exceptional items (EIs). Our core net net profit of RM284m in 3Q20 was arrived after adjusting for (i) RM36m net commodity loss, (ii) RM2m disposal gain, (iii) RM21m impairment, (iv) RM26m unrealised forex loss, (v) RM6m write off, and (vi) RM17m deferred tax asset recognised as tax loss arising from disposal of PT ISLM, (vii) RM24m fair value loss on PNG’s biological assets (i.e. sugarcane plantation).

QoQ. 3Q20 core net profit more than doubled to RM284m (from RM132m in previous quarter), boosted mainly by higher realised average CPO price (RM2,504/mt vs. RM2,361/mt in previous quarter) and stronger performance at downstream segment, but partly offset by a 3.1% decline in FFB output (arising from seasonal crop trend in PNG). During the quarter, PBIT at downstream segment almost tripled to RM71m (from RM24m in previous quarter), as weaker results from the European refineries (arising from weaker demand) were more than mitigated by gradual improvement in demand in Asia Pacific operations.

YoY. 3Q20 core net profit surged 3.2x to RM284m (from RM68m in previous quarter), due to significantly higher palm product prices and marginal improvement in downstream performance, which altogether more than mitigated lower FFB output (- 3.1%) and OER.

YTD. 9M20 core net profit surged 7.9x to RM594m, as a 6.3% decline in FFB output and weaker downstream performance were more than mitigated by higher palm product prices, higher contribution from sugar operation in PNG (as it recovered from pest and disease issue in 2019) and lower CPO production cost (as certain activities were not carried out due to movement restriction arising from Covid-19 pandemic).

FFB output guidance. Management guided down its FFB output growth guidance for FY20 (to -3-4% from flattish earlier) due mainly to labour shortfall in Malaysia operations and change in cropping pattern in Indonesia. Moving into FY21, we sense that management is more positive on its FFB output, as it does not expect the lagged drought impact (in FY19) to protract into FY21.

Forecast. We raise our FY20 core net profit forecast by 55.4% to RM791.4m, mainly to account for higher CPO prices YTD. We maintain our FY21-22 core net profit forecasts for now, pending a review in our average CPO price assumptions post results season. Based on our estimates, every RM100/mt change in our average CPO price assumptions will results in RM250m change in our PBIT forecasts.

Maintain HOLD; TP: RM4.63. We maintain our SOP-derived TP of RM4.63 (see Figure #2) and HOLD rating on the stock. There is an upside bias to our TP, pending a post results season review on our average CPO price assumption.

Source: Hong Leong Investment Bank Research - 24 Nov 2020

Share this
Labels: SIMEPLT

Related Stocks

Chart Stock Name Last Change Volume 
SIMEPLT 4.98 0.00 (0.00%) 2,280,500 

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Stock Screener using Technical and Fundamental criteria
MQ Affiliate
Join the MQ Affiliate Program today to earn rewards
 
 

275  849  537  455 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 DNEX 0.30+0.04 
 DNEX-WD 0.06+0.015 
 BIOHLDG 0.295-0.005 
 XOX 0.08-0.01 
 PHB 0.0250.00 
 XOX-WC 0.020.00 
 LUSTER 0.195+0.01 
 VIZIONE 0.225-0.045 
 QES 0.365-0.015 
 AT 0.175-0.005 

FEATURED POSTS

1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!

TOP ARTICLES

1. Tan Sri Lim: “Being sick is being abnormal.” TOPGLOV allows only 2 paid sick leave p.a. LHL please make a police report if what you says is true! gloveharicut
2. Eurocham: No mention of lockdown after Feb 4 in meeting with Miti save malaysia!
3. Jaks Resources - Final Update :- Jaks Hai Duong Power Plant achieved FULL COD ! DK
4. Bargain hunting lifts GLOVEs share prices, say analyst, fund manager as situation remains 'volatile' gloveharicut
5. CIMB: FREIGHT is trading at a 60.9% & 30.8% discount to its local & regional peers gloveharicut
6. Intco, Top Glove, Supermax - A Quick Comparison Trying to Make Sense Bursa Investments
7. Health Ministry says govt not keen to implement MCO for a long period save malaysia!
8. Supermax record profit must prevail - Koon Yew Yin Koon Yew Yin's Blog
PARTNERS & BROKERS