IJMP’s core net loss of -RM10.6m in FY19 came in broadly within expectations (vs. consensus and our estimated core net losses of -RM9.1m and -RM11.5m respectively). Declared interim DPS of 2 sen (ex-date: 26 Jun 2019), translating to a dividend yield of 1.4%. Maintain our FY20-21 core net profit forecasts and TP of RM1.04 (based on 22x FY20 EPS of 4.7 sen) for now, pending further review in our average palm product price assumptions post reporting season. We reiterate our SELL rating on the stock.

Within expectations. Core net loss of -RM10.6m in FY19 came in broadly within expectations (vs. consensus and our estimated core net losses of -RM9.1 and - RM11.5m respectively).

Dividend. Declared interim DPS of 2 sen (ex-date: 26 Jun 2019), translating to a dividend yield of 1.4%.

QoQ. 4QFY19 performance returned to the black with a core net profit of RM0.4m (from a core net loss of -RM16.3m in 3QFY19), boosted mainly by a recovery in palm product prices (in particular, Indonesia) and higher CPO sales.

YoY. 4QFY19 core net profit fell -98% to RM0.4m, mainly on the back of sharply lower palm product prices and higher production cost. We note the higher production cost in Malaysia was driven mainly by increased fuel prices and higher wages for harvesting tall palms, while higher production cost in Indonesia was driven mainly by higher unit cost production arising from full fixed plantation maintenance and overhead cost, which set against start-up crop yields.

YTD. FY19 reversed to a core net loss of -RM10.6m (vs. a core net profit of RM70.3m in FY18), and this was due mainly to sharply lower palm product prices and higher production costs.

Forecasts. Maintained for now, pending further review in our average palm product price assumptions post reporting season. Our sensitivity analysis indicated that every RM100/mt change in CPO price assumption will change our FY20-21 core net profit forecasts by circa 9%.

Maintain SELL, with unchanged TP of RM1.04. We maintain our SELL rating on the stock, with an unchanged TP of RM1.04 based on 22x FY20 core EPS of 4.7 sen. At current price, IJMP is trading at FY20 P/E of 31x.

Source: Hong Leong Investment Bank Research - 30 May 2019