Plantation company Cepatwawasan Group Bhd has been continuing its ascend after breaking past the resistance on strong volume. On a year-to-date basis, it has gone up 12.14% to close at 78 sen on March 7.

In terms of prospects, the plantation company is expected to benefit from rising crude palm oil, which is on the uptrend. Demand from Asian countries has been strong given their huge consumption of CPO.

In the near term, analysts expect the price of CPO to strengthen this month due to a low output cycle, lack of competing oils, and Ramadan driven demand boost. Its projection is for the CPO price to briefly breach RM4,200 per tonne in February to March this year.

Thereafter, however, the CPO price is expected to trend lower by mid-2024, as supplies improve with the availability of new South American harvests, and anticipation of CPO output recovery in the second half of 2024.

It managed to return to the black with a net profit of RM7.85 million in 4QFY23 from a net loss of RM2.46 million a year ago. Revenue rose to RM85.15 million from RM77.62 million.

The much better performance was contrasted sharply with the previous year's corresponding quarter, which was hampered then by the biomass plant shutdown. In addition, the increase in FFB production by 8% offset the decline in the average selling prices of CPO (-6%) and PK (-5%) respectively.

Cepatwawasan’s plantation segment experienced an increase in profit, rising by RM1.61 million (38%) from RM4.25 million to RM5.87 million. This growth is primarily attributed to a significant reduction in fair value loss on biological assets, plummeting from RM1.78 million in the preceding year's quarter to merely RM0.26 million in the current year's quarter.

Additionally, despite a 7% decline in the average FFB selling price, the impact was mitigated by an 8% rise in FFB production coupled with reduced FFB production costs.

Meanwhile, its oil mill segment profit increased by RM1.38 million (59%) driven by an 11% increase in FFB processed during the period despite a slight decline in Mill OER from 20.13% to 19.75%.

As for its power plant segment, it made a remarkable profit turnaround, from a segment loss of RM2.06 million to a segment profit of RM2.38 million.

This improvement was chiefly attributed to the biomass plant shutdown that occurred from October 22 to February 23, which had caused a reduction in power exports and EFB oil sales in the preceding year corresponding quarter.

Power exports surged by 100%, while EFB oil sales volume doubled, contributing to the overall turnaround and profitability of the power plant segment. Cepatwawasn may not be the first name on investors’ mind when considering the beneficiaries of rising CPO but it is certainly appealing and worth taking a look.