Investment Highlights

• Hap Seng Consolidated held a conference call last Friday.
• Hap Seng Plantations (HSP) expects its FFB production to grow by 5.2% in FY21F. The group’s FFB output is envisaged to be flat at 657,000 tonnes in FY20E.
• HSP anticipates FFB production in 4QFY20 to be higher than 3QFY20.
• In spite of heavy rains in 4QFY20, HSP has not faced problems with FFB harvesting. Labour shortage is also not a major issue for HSP.
• HSP has applied 74% of its full-year fertiliser requirements as at end-September 2020. The group is on track towards completing its full-year fertiliser programme in FY20E.
• HSP estimates its all-in cost of CPO production to be RM1,600/tonne in FY20E (FY19: RM1,482/tonne). The group’s all-in cost of CPO production was RM1,713/tonne in 9MFY20 vs. RM1,559/tonne in 9MFY19.
• The increase in HSP’s cost of production per tonne in FY20E can be attributed to higher costs of manuring and purchases of FFB from third parties.
• HSP is looking to acquire plantation landbank. However, it is difficult to find sizeable landbank at decent prices. HSP’s planted landbank stood at 35,957ha as at endFY19.

Source: AmInvest Research - 30 Nov 2020