• GENP’s 9M16 net income of RM165.6m was above our expectation, making up 95% of our full year forecast.

• Higher palm product selling prices has sufficiently compensated for the decline in FFB production and property sales. Revenue and PBT were 2% and 28% higher yoy to RM966.7m and RM226.4m respectively.

• Lower R&D expenditure from Biotechnology segment also contributed to the 9M16 earnings.

• We raised our FY16 and FY17 earnings forecast and upgraded our recommendation from Sell to Hold with TP of RM10.15 (previous: RM9.64). Earnings came-in above our expectation. GENP’s 9M16 earnings of RM165.6m is above our expectation. This was largely attributed to better plantation profit as higher selling palm product prices more than compensated the lower production of FFB and lower property sales.

Earnings for group plantation segment increase 19% yoy to RM277.1m, thanks to the Plantation-Indonesia segment which saw earnings more than tripled to RM34m (9M15: RM7.8m).

On the other hand, lower property sales (-11% yoy) was due to the absence of a one-off gain from land sale of RM19.8m which occurred in 2015 and substantially lower land sales concluded in the period., These factors dragged down property segment earnings lower yoy.

Dividend. No dividend has been proposed or declared during the quarter. The total dividend declared so far is 2.0sen/share for financial year 2016.

Source: BIMB Securities Research - 24 Nov 2016