IJMP’s core net profit of RM13.4m in 4QFY20 (QoQ: -52.5%; YoY: +67.5%) brought FY20 core net profit to RM34.8m (vs. core net loss of -RM10.6m in FY19). The results came in within expectations, accounting for 99-100% of consensus and our estimates. We maintain our FY21-22 core net profits, TP of RM1.71 (based on unchanged FY22 core EPS of 8.5 sen), and BUY rating on IJMP.

Within expectations. 4QFY20 core net profit of RM13.4m (QoQ: -52.5%; YoY: +67.5%) brought FY20 core net profit to RM34.8m (vs. core net loss of -RM10.6m in FY19). The results came in within expectations, accounting for 98-100% of consensus and our estimates.

Exceptional items (EIs). During the quarter, we adjusted for RM89.8m worth of EIs, which relates mainly to (i) RM63m net forex loss, (ii) RM37.7m net forex translation loss on borrowings, (iii) RM2.8m FV loss on interest rate swap, and (iv) 14.2m FV gains on CPO pricing swap.

Dividend. Declared interim DPS of 2 sen (going ex on 29 Jul 2020), in line with our expectation.

QoQ. Core net profit fell 52.5% to RM13.4m in 4QFY20, as higher realised palm product prices were more than offset by lower sales volume and higher unit production cost (arising from seasonally lower production). Recall in our report dated 29 Apr 2020, IJMP did not face major disruptions from MCO, except for certain logistic issues.

YoY. Core net profit rose 67.5% to RM13.4m in 4QFY20, as significantly higher realised palm product prices more than mitigated lower CPO sales volume and higher CPO production cost.

YTD. FY20 returned to the black, with a core net profit of RM34.8m (vs. core net loss of -RM10.6m in FY19), due mainly to higher sales volume and realised palm product prices.

FFB production. FFB production grew 7.8% to 976.4k mt in FY20, driven mainly by change in cropping pattern in both Malaysian and Indonesian operations and more areas attaining maturity in Indonesian operations.

Forecast. Maintain. In our forecasts, we are projecting FY21-22 earnings growth of 74.3% and 24%, underpinned by higher average CPO price projections and more areas attaining maturity in Indonesian estates.

Maintain BUY, with unchanged TP of RM1.71. We maintain our BUY rating on IJMP, with an unchanged TP of RM1.71 based on 20x FY22 core EPS of 8.5 sen.

Source: Hong Leong Investment Bank Research - 29 Jun 2020