• Overview. GENP’s 4Q20 core PBT improved 64% yoy to RM134.5m as revenue increased 15% to RM739.3m mainly on higher palm products selling prices and higher property sales (Table 2 and 3). Nonetheless, EBITDA for the downstream and property segments dropped 72% and 60% respectively to RM5.6m and RM4.2m resulting from lower sales volume and capacity utilisation as well as lower margins. On quarterly basis, higher profit was attributed by an increase contribution from plantation segment on account of higher FFB production and higher ASP realised of CPO and PK.

• Against estimates: above. FY20 core PBT was above our expectation. Core PBT was higher at RM311.7m (70% yoy) as revenue increased 10% to RM2.50bn on higher palm products prices, sufficient to compensate for the weak production and lower sales from property segment as well as margin compression from downstream segment.

• Dividend. GENP has declared a final DPS of 4.0sen together with special DPS of 11.0sen in 4Q20 which if approved would bring a total dividend of 21.0sen for FY20 (FY19: 13.0sen); translating to DY of 2.3%.

• Outlook. We are cautiously optimistic on the performance of GENP. Although we expect performance of plantation segment to be driven by higher ASP of palm products and improve in production, there is high possibility of continuing margin squeeze in downstream segment and slow uptake in property segment. Both its Johor and Genting’s Premium Outlets may continue to experience lower patronage until concerns on the COVID- 19 fully subside. According to management, property sales dropped 42% yoy to RM93m whilst unbilled sales stood at RM35m as at end-Dec 2020.

• Our call. Maintain HOLD with unchanged TP of RM10.00 based on target BV/share of RM5.50 and historical 3-yrs avg. P/BV of 1.8x.

Source: BIMB Securities Research - 25 Feb 2021