TH Plantation (THP) managed to sustain its 1HFY23 performance with a PATAMI of RM16.8mn, attributed to higher profits from short-term investments and sundry income, amounting to RM25mn (against RM8mn: 1HFY22), supplemented by a fair value gain in biological assets of RM7.2mn (1HFY22: FV loss of RM9.7mn), as well as an unrealized gain of RM19.3mn compared to RM1.8mn in 1HFY22 – thus, mitigating the impact of lower operating profits from plantation activities. Despite this, there was no significant earnings respite; nevertheless, the company remained profitable after delivering a PBT of RM32.4mn (core PBT: RM5.8mn). Overall, the 1HFY23 core PBT of RM5.8mn fell short of our expectations, constituting only 12% of our full-year estimate. Nonetheless, its PATAMI exceeded both our and consensus expectations. All in all, we maintain a positive outlook on its long-term prospects, as it is set to leverage on better palm oil products price, subject to CPO price rebound (expected to trade RM400/MT above or below RM3,800/MT for the rest of the year), in addition to an expected production growth for this year. We have a non-Rated recommendation on the stock.
Source: BIMB Securities Research - 30 Aug 2023
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