KUALA LUMPUR (Aug 26): Hap Seng Plantations Holdings Bhd’s (KL:HAPSENG) net profit almost tripled to RM27.67 million for the second quarter ended June 30, 2024 (2QFY2024), from RM9.42 million a year ago, driven by higher average selling price (ASP) of all palm products, higher sales volume of crude palm oil (CPO) and lower operating expenses.

The group's operating expenses dipped 4.76% to RM146.24 million from RM153.56 million a year earlier.

Earnings per share came in higher at 3.46 sen in 2QFY2024, from 1.18 sen per share in 2QFY2023. Revenue rose 8.31% to RM182.82 million — its highest since 2QFY2022, when it recorded RM246.86 million — from RM168.79 million a year before.

It announced a first interim dividend of 1.5 sen per share, payable on Sept 24, 2024.

It said the ASP per tonne of CPO for the current quarter was 7.44% higher at RM4,247, from RM3,978 a year ago, while the ASP for palm kernel (PK) rose 16.42% to RM2,524, from RM2,168.

CPO sales volume for the current quarter was 38,288 tonnes, 2% above the 37,635 tonnes previously recorded due to timing of deliveries carried over from the immediate preceding quarter.

PK sales volume, on the other hand, fell 9% to 6,929 tonnes from 7,604 tonnes a year before due to lower production.

Hap Seng Plantations said CPO production for 2QFY2024 was lower than 2QFY2023 by 5% while PK production was down 9%, as fresh fruit bunch (FFB) production fell amid seasonal yield trend and changes in cropping patterns, lower volume of FFB purchased and lower extraction rates.

Also lower was production cost for the current quarter due to lower fertiliser costs, it said.

For the first half of FY2024 (1HFY2024), the planter's net profit nearly doubled to RM64.2 million from RM32.84 million in 1HFY2023, as revenue expanded by 3.98% to RM341.82 million from RM328.72 million.

Rising stockpiles and weak exports to weigh on CPO prices

On prospects, the group said, citing analysts, that palm oil stockpile is expected to build up in the forthcoming months as production of FFB entered into its peak cropping season while exports are expected to be weaker.

“Against this backdrop, CPO prices are expected to be under pressure, particularly during its high cropping season.

“In the recent World Agricultural Supply and Demand Estimate report released on August 12, global oilseed production is projected to increase further on higher production of soybean and rapeseed. This is expected to result in more competitive soft oil prices and narrow the price discount of palm oil to soybean oil,” it added.

Average monthly CPO price in July was RM4,034 per tonne, while daily prices in the first half of August ranged between RM3,833.50 and RM4,028 per tonne, it noted.

Palm oil producers, meanwhile, continued to face inflationary pressures and high production costs, it said. “Nevertheless, the group continues to put concerted efforts to improve the overall efficiencies of its operations to mitigate the high cost of production whilst practising good plantation husbandry to further improve FFB yield and extraction rates,” it added.

Hap Seng Plantations’ share price settled one sen or 0.6% higher at RM1.71 on Monday, valuing the group at RM13.68 billion.