KUALA LUMPUR (Dec 19): TA Securities has revised upward its target price for United Malacca Bhd to RM4.53, based on 16-times calendar year 2024 earnings per share (EPS), after incorporating the higher-than-expected results for the second quarter of financial year 2024 (2QFY2024).

In a note on Tuesday, the research firm maintained its ‘sell’ recommendation on the plantation company’s stock, citing better oil palm age profile and crop recovery surrounding United Malacca’s operation in Indonesia.

“We revise upward our FY2024 and FY2025 earnings projections by 46.5% and 4.9% respectively, after incorporating the higher-than-expected 2QFY24 results, higher fresh fruit bunches (FFB) production growth and margins” TA Securities said.

The research house also introduced its FY2026 earnings forecast for United Malacca at RM70 million.

“Going forward, management would remain focused on improving labour productivity, mechanisation initiatives and cost efficiency, as well as increasing oil yield,” TA Securities said.

Earlier, United Malacca reported its core net profit for 2QFY2024 decreased by 3.4% year-on-year (y-o-y) to RM16.2 million, mainly due to lower palm oil prices and FFB production from its Malaysian operations.

However, the results came in above the research house’s estimate, but within consensus estimate, due to better-than-expected FFB production growth and margins.

At Monday’s close, shares of the group settled four sen or 0.8% lower to RM4.93, giving it a market capitalisation of RM1.03 billion.

Year to date, the stock has fallen 8.7%.