SOP’s FY17 revenue and core PBT surged 11% and 62% to RM4.9bn and RM338.5m respectively as higher FFB, CPO and PK production (+36%, +25% and 23% yoy) and ASP for palm oil products (+9% yoy) and PK products (+2% yoy) contributed to higher revenue and earnings in palm oil segment. Hence, PBT margin improved strongly to 6.9% from 4.7% recorded in FY16.
On qoq basis, adjusted PBT dropped 5.7% to RM83.9m as there was a decrease in production and palm products transacted volume as well as 16% increase in operating expenses to RM1.27b. On yoy basis, core PBT was higher by 34% as revenue surged 16% on higher production and palm products transacted volume.
We maintain our FY18 and FY19 earnings forecast to RM214m and RM221m respectively as we believe the improvement in FFB production will partially offset the anticipated lower palm product prices moving forward. We forecast that for FY18, FFB production will hit 1.49m tonnes vs. 1.33m tonnes in FY17. Maintain Target Price at RM6.00 based on SOP’s 5-years average PER 16x on FY18F EPS.
Source: BIMB Securities Research - 1 Mar 2018
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