Results

• FY03/15 core net profit of RM132.9m (+4.6%) came in within expectations, accounting for 97.4-97.8% of our and consensus estimates.

Deviations

• Largely in line.

Dividend

• Declared single-tier DPS of 6 sen (entitlement date: 25 Jun 2015; payment date: 7 Jul 2015), and this is in line with our projection.

Highlights

• YTD… FY03/15 core net profit increased by 4.6% to RM132.9m, mainly on RM6.1m gain from CPO swap contracts and higher interest income from its operations in Malaysia as well as higher FFB production from Indonesian operations. All these more than offset the unfavourable exchange rate movement of Rupiah against the US$.

• QoQ… Despite the positive RM21.4m tax charge, 4QFY03/15 core net profit declined by 29.4% to RM25.6m and this was dragged mainly by RM7.5m net forex losses, lower palm product prices and lower production in Malaysian operations.

Risks

• Weaker-than-expected FFB production and OER;
• A sharp increase in production cost; and
• A sharp decline in vegetable oil prices.

Forecasts

• Maintained.

Rating

HOLD

Positives

• (1) Strong FFB contribution from Indonesia; and (2) Strong balance sheet.

Negatives

• (1) Demanding valuation; and (2) Low liquidity.

Valuation

Maintain TP of RM3.52 (based on unchanged 17x FY03/17 EPS of 20.7 sen) and HOLD recommendation. While we like IJMP for its strong FFB output growth in the coming years and healthy balance sheet, we believe further upside to its share price will likely be capped by its pricey valuations as well as the imposition of export levy on CPO in Indonesia which will likely affect the pure upstream plantation players’ (including IJMP) bottomline in the near term.

Source: Hong Leong Investment Bank Research - 27 May 2015