• Maintain HOLD (TP: RM6.00). Genting Plantations Bhd (GENP) reported a core PATAMI of RM126.4mn in 1HFY24, reflecting a 21% YoY increase. This result was broadly in line with our expectations but fell below the consensus at 53% and 43% of the full-year forecast, respectively. Revenue for 1H24/2Q24 was lower YoY, at RM1.36bn and RM757mn, respectively, primarily due to lower sales volume from the Downstream Manufacturing segment, partially mitigated by higher palm product prices. Nonetheless, the bottom line improved by 21% and 16% YoY, reaching RM126mn in 1H24 and RM80mn in 2Q24, as margins for both segments improved on account of higher palm product prices, which more than offset the lower FFB production recorded during the period, as well as improved sales in the biodiesel and refinery segments. A first interim DPS of 8.0sen was declared, payable on 30 September 2024 (1H23 DPS of 8.0sen). Maintain a HOLD call with a TP of RM6.00, based on average FY24F/25F BV/share of RM6.13 and P/BV of 0.98x.

• Key highlights. In 2QFY24, GENP’s QoQ revenue and PATAMI increased by 25% and 74%, reaching RM757mn and RM80mn, respectively. This was primarily driven by higher revenue contributions from the Plantation and Downstream Manufacturing segments, amounting to RM565mn and RM324mn, respectively, as margins for both segments improved to 33.5% and 2.0% from 28.0% and 0.5% in 1Q24 (Refer to Table 2). Notably, during this period, the Plantation segment recorded higher palm product prices and a 6% improvement in FFB production. Additionally, Indonesia's local CPO price appreciated significantly during this period, narrowing its discount to Malaysian CPO prices due to a shortage of CPO in the Indonesian domestic market.

• Outlook. We maintain a cautiously optimistic outlook on GENP's long-term prospects, expecting overall earnings to remain satisfactory and in line with our forecasts. This expectation is mainly driven by sustainable profit contributions from the Plantation segment, supported primarily by favourable palm product prices and Group’s FFB production

Source: BIMB Securities Research - 30 Aug 2024