IJMP’s 9MFY21’s core net profit of RM72.5m (vs. RM21.4m SPLY). The results beat expectations, accounting for 84.5-85.8% of consensus and our full-year estimates, due mainly to higher-than-expected CPO price realised. We raise our FY21 core net profit forecast by 7.0% to RM100.3m, mainly to account for higher palm product prices clocked in YTD. Maintain FY22-23 core net profit forecasts. We maintain our BUY rating on IJMP, with unchanged TP of RM2.29 (based on unchanged 20x FY22 core EPS of 11.5 sen).

Above expectations. 3QFY21 core net profit of RM32.4m (QoQ: -0.3%; YoY: +27.0%) took 9MFY21’s sum to RM72.5m (from RM21.4m SPLY). The results beat expectations, accounting for 84.5-85.8% of consensus and our full-year estimates, due mainly to higher-than-expected CPO price realised.

Exceptional items (EIs). Core net profit of RM72.5m in 9MFY21 was arrived after adjusting for (i) RM86.3m forex gain, (ii) RM11.3m fair value loss on CPO pricing swaps, and (iii) RM0.2m fair value gain on interest rate swaps.

QoQ. Core net profit fell 0.3% to RM32.4m in 3QFY21, as higher realised palm product prices and higher CPO sales volume were more than offset by higher tax expense and lower PKO sales volume.

YoY. Core net profit surged 27.0% to RM32.4m in 3QFY21, as higher production cost (arising from lower FFB output) and lower sales volume were more than mitigated by higher palm product prices.

YTD. 9MFY21 core net profit surged 3.4x to RM72.5m (from RM21.4m SPLY), as lower FFB output in Indonesia (arising from adverse weather condition) was more than offset by FFB output recovery in Malaysia operations and higher palm product prices.

FFB output. FFB output grew 1.8% to 821.3k tonnes in 9MFY21, as a 3.4% decline in FFB output in Indonesia operations (as a result of less favourable weather condition) was more than mitigated by an 8.3% increase in FFB output in Malaysia operations (due to crop recovery).

Forecast. We raise our FY21 core net profit forecast by 7.0% to RM100.3m, mainly to account for higher palm product prices clocked in YTD. Maintain FY22-23 core net profit forecasts.

Maintain BUY; TP: RM2.29. We maintain our BUY rating on IJMP, with unchanged TP of RM2.29 (based on unchanged 20x FY22 core EPS of 11.5 sen). We continue to like IJMP for its improving earnings prospects, young age profile (average age of 14 years for Malaysian estates and 8 years for Indonesian estates) and prudent management. At RM1.81, IJMP is trading at FY21-23 P/E of 15.9x, 15.8x and 14.6x, respectively.

Source: Hong Leong Investment Bank Research - 26 Feb 2021