A Dismal FinishStripping out i) foreign exchange gain (RM6.4m) and ii) net fair value gain on investment securities (RM1.8m) Chin Teck Plantations ended FY23 with core earnings of RM45.1m, down 56.6% YoY. The weaker-than-expected results were mainly attributed to losses from the associate and joint-venture companies in the final quarter. Nevertheless, we make no changes to our earnings forecasts, as we expect to see stronger earnings going forward in tandem with improved CPO prices and the normalization of fertliser costs. Maintain Neutral with an unchanged TP of RM7.70 based on 11x FY24 EPS. No dividend was declared for the final quarter.

• 4QFY23 topline softened by 22% YoY. During the final quarter, the Group’srevenue fell from RM63.6m to RM49.5m, mainly led by weaker palm oil prices.Average CPO price retreated from RM5,345/mt to RM3,843/mt (FY23:RM3,985/mt vs FY22: RM5,226/mt). 4QFY23 FFB production remained at49,258mt (FY23: 197,596mt, YoY: +11.6%). Oil extraction rate for CPOweakened from 19.38% to 19.24% (FY23: 19.13% vs FY22: 19.62%). As ofFY23, total planted area stands at 12,201ha with 10,357ha of mature area.

• 4QFY23 bottomline tumbled 58% YoY. Stripping out net fair value gain oninvestment securities (RM1.8m) and foreign exchange gain (RM2m), thegroup’s 4QFY23 core profit sank from RM23.4m to RM9.9m, mainly weighedby losses from associate and joint venture companies in Indonesia. The higheradministrative expenses from RM6.4m to RM7.5m was attributed to theacquisition of a subsidiary, Fauzi-Lim Plantation S/B. Meanwhile, its Indonesiaplantation associate saw its losses ballooned from RM0.6m to RM6.4m.

• Disruption to JV-owned Indonesian plantation continues. Since 2012, theunrest in the surrounding villages located in the vicinity of the plantations inLampung Province, Indonesia, has seriously affected the routine harvestingactivities. As of now, the total accessed area remains at 53.61% of the totalplanted area. Meanwhile, harvesting of the mature area located in SouthSumatera Province has also been delayed due to the unrest in the neighbouringestate. According to management, commencement of harvesting is pendingclearance by the relevant authorities

Source: PublicInvest Research - 31 Oct 2023