• Maintain SELL (TP: RM1.55). Boustead Plantations (BPB) 9MFY23 core PATAMI of RM14.9mn (-89% YoY) exceeded our estimates but trailed with consensus expectations, accounting for 82% and 49% of the full-year forecast, respectively. The deviation from our projection was mainly due to an overprovision we made for operating expenses. In light of these results, we have adjusted our FY23 and FY24 earnings forecast higher to RM20.2mn and RM16.2mn respectively from RM18.2mn and RM14.3mn previously. This decline was mainly due to lower average selling price of palm products, coupled with lower FFB and CPO production. Maintain a SELL call with new TP of RM1.55 (from RM0.65 previously) to aligns with the current offer price from LTAT, aimed at leveraging the ongoing offer. For shareholders who have already invested, we recommend retaining their positions and consider the cash offer of RM1.55/share from LTAT.

• Key highlights. BPB reported an improvement in FFB and CPO production to 218k tonnes (+21% QoQ) and 51k tonnes (+20% QoQ), respectively, in 3Q23, cushioning the drop in the ASP of CPO and PK. This resulted in a slight improvement in revenue to RM202.5mn (+0.7% QoQ) during the period.

• Earnings Revision. We have adjusted our FY23/FY24 earnings forecast higher to RM20.2mn/RM16.2mn, after taking into account our adjustment on operating expenses.

• Outlook. Looking ahead, we expect BPB's earnings potential to be at risks under the following circumstances: 1) a significant retreat in palm product prices, 2) escalation in operational costs, 3) continued suboptimal production due to lower yield, and 4) inability to capitalise on the monetisation of plantations landbank.

Source: BIMB Securities Research - 23 Nov 2023