IJM Plantations BHD

3Q FY12 Results
9MFY12 results above expectation IJMP's 9MFY12 results were above our expectations. 9-month PBT of RM200.8m accounted for about 92% of our full year target whilst revenue of RM355.7m accounted for about 78% of our full year estimate. For the 9-month period under review, revenue rose 12% while net profit was up by 24% to RM150.2m on better commodity prices and higher FFB production. The average CPO price was RM3,027/MTcompared to RM2,671/MT and the average PKO price increased from RM3,855/MT to RM4,134/MT. FFB production was 12% higher on a recovery from palm yield stress in the previous financial year. Indonesian estates had contributed about RM7.6m in revenue to its 9M results. FFB production of 16,367MT was only accounted for about 3% of its total FFB production. Its Indonesian operations are still under the planting development stage, hence, contribution is insignificant compared to Sabah operations. The group had previously expressed its intention to invest RM1b in its oil palm plantations in Indonesia during 2012-2014 period. To date, the group has planted over 13,600ha in Indonesia. The Indonesian operations will contribute meaningfully by 2014. 3QFY12 revenue of RM146.4m was 9% higher YoY but 19% lower QoQ. The lower QoQ revenue was due to lower sales volume for CPO and PKO as well as lower commodity prices. Nevertheless, operating margin of 48.9% was higher compared to 34.8% in 2Q.

Recommendation
We have tweaked our forecast on its better YTD results. Based on a forward PE of 14x, our derived fair value is RM3.80. HOLD

Source:Jupiter Securities Research 24 Feb 2012